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3Q07 Results
Vivo Participações S/A
November 5, 2007
          ,
                                     1
                   público copyright©vivo2007
Highlights
      g g


     Acquisition of Telemig and Amazônia Celular
       q                  g
     Purchase of 1.9 GHz frequency
     Elimination of structural problems
     Implantation of the “Vivo para o Cliente” program
     Net revenues up by 15% YoY and 7.5% QoQ
     EBITDA climbs 31% QoQ and 16% YoY
     Net Income of R$ 4 million




2
Survey reveals:
         Vivo is the best consumer option!


    The Brazilian Consumer Rights Association (PRO TESTE)
    undertakes an annual survey of currently available mobile plans.
    In the 2007 edition of the “Mobile Tariffs” report, Vivo was the
                                                                       The Brazilian Consumer
    leading highlight.
                                                                       Rights Association – PRO
                                                                         TESTE - declares Vivo
                                                                       to be the best choice for
        Source: Gazeta Mercantil – Oct 15                                     consumers!
        “...Vivo offers to its users cheaper plans than other
        mobile operators.”




3
Vivo Participações 3Q07 Results


    Agenda
     ge da



                    Operating Performance
                    Financial Performance
                    Final Remarks




4
Customer base

        Share of net additions: 26.4% - market leader in its operational
        area and nationwide
        Market share: 36.8% in its operational area
        GSM/EDGE: 77% of total activations
        Vivo Escolha: 63% of individual postpaid base
        Churn Rate: 2 2% i th quarter
        Ch    R t 2.2% in the     t                   + 9.0%
                                                        9 0%

                                                                       + 3.6%

                                                                            31,320
                                                               30,240
                                                 28,726
             Distribution Channels
              8,020 points of sale
              347,000 recharge points
                 ,          g p
              New recharge partners:
              Redecard and Hypercard



                                                  3Q06          2Q07            3Q07

5
Products and services
                Residential Phones
     • fixed-line phone using wireless network
     • fixed-line tariffs
     • simplicity and mobility

                                                               Vivo Flash
                                                 • wireless residential broadband internet
                                                 access - desktop
                                                           des top
                 New Partnerships

     • Yahoo!
     • SonyBMG
     • Terra - Sonora

                                                 • Dual-delivery: receiving music
                                                 acquired through cell phone also in the
                                                                   cell-phone
                                                 computer


           BlackBerry C
           Bl kB      Curve


6
SAC*                                                            GSM:
                                                              more competitive prices
                                                           capture of higher value clients
                                                           increase in postpaid additions

                      + 9.5%
                                                                         =
                                      + 7.5%            87% growth in high and medium-value
                                                           postpaid additions in the 3Q07
                                               115
               105             107
                                               19%
              24%              24%
                                               24%
              25%              21%




                               56%             57%
              51%



              3Q06             2Q07            3Q07
            Subsidy     Commission        Advertising




    *Blended SAC


7
ARPU and MOU trends

                ARPU                                            MOU

           + 7.3%                                              - 1.3%
                           + 3.0%



                    29.9            30.8             78          77          77
    28.7


                    13.7            13.9                          35         35
    13.4                                              39


                                           + 10.5%                                 +7.7%

    15.3            16.2            16.9              39          42         42



    3Q06            2Q07            3Q07             3Q06       2Q07        3Q07
           Outgoing           Inbound                       Outgoing    Inbound




8
Loyalty and retention

    Actions                           Results

    Reward Program                    22% growth in sign-in rate
    Customer recapture                6,500 customers “recaptured”
    Restructuring of plans            More than 100 000 restructurings
                                                100,000
    Recovery of suspended customers   6,000 suspended customers “recovered”
    Alteration of recharge mix
                        g             Recharge revenue: R$994 million, 25%
                                      up YoY
    Recharge incentives

                                                 Loyalty and retention efforts
                                                focused on high- and medium-
                                                       value customers




9
Vivo Participações 3Q07 Results


     Agenda
      ge da



                     Operating Performance
                     Financial Performance
                     Final Remarks




10
Net service revenue
     R$ million


                                                           + 15.3%

                                                                     + 7.5%

                   Data and VAS Revenue                                       2,846
                                                            2,648
                                                2,468
                  8.3%
                  8 3% of net service revenue

                  34% YoY growth                                              1,252
                                                             1,187
                                                1,150




                                                                              1,373
                                                                               ,
                                                             1,260
                                                             1 260
                                                1,167



                                                151           201              221

                                                3Q06          2Q07          3Q07
                                                        Network usage
                                                        Subscriptions and usage
                                                        Other services




11
Operating costs*
      p      g
     R$ million
                                                                 Operating costs under strict
                                                 159               control despite fiercely
                    General and
                   Administrative
                                                 162              competitive environment
                                           113

                      Selling                                                                   729
                     Expenses                                                                   728
                                                                                             697


            Cost of Goods Sold                                                 585
                                                                            549
                                                                      512

                                                 151
                         H.R.                     165
                                                  151

                                             144
                  Fistel, Fust, Funtel       140
                                             141


                  Cost of Services                                                     659
                                                                                     640
                     Rendered
                                                                        543


                                         3Q06
                                          Q             2Q07
                                                         Q     3Q07
                                                                Q



     *Excluding depreciation
12
Ebitda and Ebitda margin
                          g
     Balance between sales and
            profitability
                  =
       Revenue 7.5% QoQ
       Costs        1 2% QoQ
                    1.2%
       EBITDA 31.4% QoQ
                                      25.3%                     25.7%
                                                  21.0%
                                                  21 0%
                         R$ million




                                                               833.3
                                       715.6
                                                  634.2




                                       3Q06       2Q07         3Q07
                                               EBITDA Margin



13
Cash flow and net result
      R$ million

                           Cash Flow *                             Net Result
                                                          961.8




                                                                                      4.4



                                   527.5

                                                  444.6                      -112.8
                                                                              112 8

                   340.7
                                                                    -196.9


                           137.6




                   3Q06 2Q07 3Q07                9M06      9M07     3Q06     2Q07     3Q07
                    * EBITDA – CAPEX + change in working capital




14
Financial result, gross debt and net debt
     R$ million


                          Gross Debt                                                 Net Debt
                                                                                       - 29%
                            - 14%

                                         - 9%                              4,147.6              - 11%
                  4,699.6
                               3,705.7          4,038.4
                                                                                      3,336.3
                   68%
                   68%                           55%
                                                 55%
                                67%                                                                     2,957.7

                   32%                           45%
                                                 45%
                                33%
                                 33%

                   3Q06         2Q07             3Q07                       3Q06        2Q07             3Q07
                      Short Term         Long Term



                                      Financial Result

                                    3Q07                  113.8



                                    2Q07                   124.4



                                    3Q06                           201.6

15
CAPEX
                                                    R$ million
                 16%


                                 11%                  11%
                444.8


                 135.1                        369.2
                               337.3
                                              114.4
                                100.7
                 107.1
                                               48.1
                                46.3


                 202.6          190.3         206.7



                 3Q06           2Q07          3Q07
                    Network   Technology   Others

                         % Capex/Net Revenue


                         Main Investments
     Adaptation to the Number Portability project
     New Customer Service System and Front Office
     Increasing GSM Network Capacity and Quality
     Total GSM capex : 90% already utilized
16
Vivo Participações 3Q07 Results


     Agenda
      ge da



                     Operating Performance
                     Financial Performance
                     Final Remarks




17
Final Remarks

      Vivo wins the Reliable Brands prize .



                   Most valuable brand in cellular phone in Brazil :
                   R$2.25 billion




18
Disclaimer

     • This presentation may contain forward-looking statements concerning future
                                      forward looking
     prospects and objectives regarding growth of the subscriber base, a breakdown of
     the various services to be offered and their respective results. The exclusive
     purpose of such statements is to indicate how we intend to expand our business
     and they should therefore not be regarded as guarantees of future performance.


     • Our actual results may differ materially from those contained in such forward-
     looking statements, due to a variety of factors, including Brazilian political and
     economic factors, the development of competitive technologies, access to the
     capital required to achieve those results, and the emergence of strong competition
     in the markets in which we operate.




19

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VIVO - Apresentation of 3rd Quarter 2007 Results

  • 1. 3Q07 Results Vivo Participações S/A November 5, 2007 , 1 público copyright©vivo2007
  • 2. Highlights g g Acquisition of Telemig and Amazônia Celular q g Purchase of 1.9 GHz frequency Elimination of structural problems Implantation of the “Vivo para o Cliente” program Net revenues up by 15% YoY and 7.5% QoQ EBITDA climbs 31% QoQ and 16% YoY Net Income of R$ 4 million 2
  • 3. Survey reveals: Vivo is the best consumer option! The Brazilian Consumer Rights Association (PRO TESTE) undertakes an annual survey of currently available mobile plans. In the 2007 edition of the “Mobile Tariffs” report, Vivo was the The Brazilian Consumer leading highlight. Rights Association – PRO TESTE - declares Vivo to be the best choice for Source: Gazeta Mercantil – Oct 15 consumers! “...Vivo offers to its users cheaper plans than other mobile operators.” 3
  • 4. Vivo Participações 3Q07 Results Agenda ge da Operating Performance Financial Performance Final Remarks 4
  • 5. Customer base Share of net additions: 26.4% - market leader in its operational area and nationwide Market share: 36.8% in its operational area GSM/EDGE: 77% of total activations Vivo Escolha: 63% of individual postpaid base Churn Rate: 2 2% i th quarter Ch R t 2.2% in the t + 9.0% 9 0% + 3.6% 31,320 30,240 28,726 Distribution Channels 8,020 points of sale 347,000 recharge points , g p New recharge partners: Redecard and Hypercard 3Q06 2Q07 3Q07 5
  • 6. Products and services Residential Phones • fixed-line phone using wireless network • fixed-line tariffs • simplicity and mobility Vivo Flash • wireless residential broadband internet access - desktop des top New Partnerships • Yahoo! • SonyBMG • Terra - Sonora • Dual-delivery: receiving music acquired through cell phone also in the cell-phone computer BlackBerry C Bl kB Curve 6
  • 7. SAC* GSM: more competitive prices capture of higher value clients increase in postpaid additions + 9.5% = + 7.5% 87% growth in high and medium-value postpaid additions in the 3Q07 115 105 107 19% 24% 24% 24% 25% 21% 56% 57% 51% 3Q06 2Q07 3Q07 Subsidy Commission Advertising *Blended SAC 7
  • 8. ARPU and MOU trends ARPU MOU + 7.3% - 1.3% + 3.0% 29.9 30.8 78 77 77 28.7 13.7 13.9 35 35 13.4 39 + 10.5% +7.7% 15.3 16.2 16.9 39 42 42 3Q06 2Q07 3Q07 3Q06 2Q07 3Q07 Outgoing Inbound Outgoing Inbound 8
  • 9. Loyalty and retention Actions Results Reward Program 22% growth in sign-in rate Customer recapture 6,500 customers “recaptured” Restructuring of plans More than 100 000 restructurings 100,000 Recovery of suspended customers 6,000 suspended customers “recovered” Alteration of recharge mix g Recharge revenue: R$994 million, 25% up YoY Recharge incentives Loyalty and retention efforts focused on high- and medium- value customers 9
  • 10. Vivo Participações 3Q07 Results Agenda ge da Operating Performance Financial Performance Final Remarks 10
  • 11. Net service revenue R$ million + 15.3% + 7.5% Data and VAS Revenue 2,846 2,648 2,468 8.3% 8 3% of net service revenue 34% YoY growth 1,252 1,187 1,150 1,373 , 1,260 1 260 1,167 151 201 221 3Q06 2Q07 3Q07 Network usage Subscriptions and usage Other services 11
  • 12. Operating costs* p g R$ million Operating costs under strict 159 control despite fiercely General and Administrative 162 competitive environment 113 Selling 729 Expenses 728 697 Cost of Goods Sold 585 549 512 151 H.R. 165 151 144 Fistel, Fust, Funtel 140 141 Cost of Services 659 640 Rendered 543 3Q06 Q 2Q07 Q 3Q07 Q *Excluding depreciation 12
  • 13. Ebitda and Ebitda margin g Balance between sales and profitability = Revenue 7.5% QoQ Costs 1 2% QoQ 1.2% EBITDA 31.4% QoQ 25.3% 25.7% 21.0% 21 0% R$ million 833.3 715.6 634.2 3Q06 2Q07 3Q07 EBITDA Margin 13
  • 14. Cash flow and net result R$ million Cash Flow * Net Result 961.8 4.4 527.5 444.6 -112.8 112 8 340.7 -196.9 137.6 3Q06 2Q07 3Q07 9M06 9M07 3Q06 2Q07 3Q07 * EBITDA – CAPEX + change in working capital 14
  • 15. Financial result, gross debt and net debt R$ million Gross Debt Net Debt - 29% - 14% - 9% 4,147.6 - 11% 4,699.6 3,705.7 4,038.4 3,336.3 68% 68% 55% 55% 67% 2,957.7 32% 45% 45% 33% 33% 3Q06 2Q07 3Q07 3Q06 2Q07 3Q07 Short Term Long Term Financial Result 3Q07 113.8 2Q07 124.4 3Q06 201.6 15
  • 16. CAPEX R$ million 16% 11% 11% 444.8 135.1 369.2 337.3 114.4 100.7 107.1 48.1 46.3 202.6 190.3 206.7 3Q06 2Q07 3Q07 Network Technology Others % Capex/Net Revenue Main Investments Adaptation to the Number Portability project New Customer Service System and Front Office Increasing GSM Network Capacity and Quality Total GSM capex : 90% already utilized 16
  • 17. Vivo Participações 3Q07 Results Agenda ge da Operating Performance Financial Performance Final Remarks 17
  • 18. Final Remarks Vivo wins the Reliable Brands prize . Most valuable brand in cellular phone in Brazil : R$2.25 billion 18
  • 19. Disclaimer • This presentation may contain forward-looking statements concerning future forward looking prospects and objectives regarding growth of the subscriber base, a breakdown of the various services to be offered and their respective results. The exclusive purpose of such statements is to indicate how we intend to expand our business and they should therefore not be regarded as guarantees of future performance. • Our actual results may differ materially from those contained in such forward- looking statements, due to a variety of factors, including Brazilian political and economic factors, the development of competitive technologies, access to the capital required to achieve those results, and the emergence of strong competition in the markets in which we operate. 19