Vivo Participações reported its 1Q07 results. Key highlights included a 5.6% increase in EBITDA compared to 1Q06 and an 18.1% increase in ARPU. Net service revenue grew 15.4% year-over-year due to a 28% increase in data revenue. Capex was maintained at 8% of net revenue to improve network quality and expand GSM/EDGE coverage. While net losses decreased 89% from 1Q06, the company aims to become the best telecom operator for customers through innovative technology and unforgettable service experiences.

1. Vivo Participações S/A
1Q07 Results
May 9, 2007
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2. Vivo Participações 1Q07 Results
Table of contents
Vivo
Operating Performance
Financial Performance
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3. Vivo Participações 1Q07 Results
Executive Summary
Highlights
EBITDA ARPU
5.6% increase over 1Q06 18.1% up from 1Q06
Outgoing Traffic Net Results
22% up from 1Q06 89% decrease in losses over 1Q06
Prepaid Recharges Operating Cash Flow + change in working capital
20.5% increase over 1Q06 R$ 296.7 million
Distribution Channels Net Debt
National retail store share leadership with 40% 26% decrease over 1Q06
Data Revenue + VAS GSM/EDGE
Historical record in the quarter; 28% up from 1Q06 16% of total additions in 1Q07 and 33% in March
MOU Unified Systems
10.3% increase over 1Q06 100% of customer base within one common platform
* Including replacements
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4. Vivo Participações 1Q07 Results
Brand repositioning
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5. Vivo Participações 1Q07 Results
Main marketing actions
Vivo and Telefonica
R$ 1,000 promotion 2,500 Minutes
Partnership
Postpaid customers using Up to R$ 1,000 in Bonus for free calls to any
Speedy can place free recharges paid by Vivo. Vivo cell phone for 6
local calls from their Vivo The higher the recharge months, in local calls.
cell phones to any fixed amount, the higher the
phone, and from their fixed bonus to talk to any other
phones to any Vivo cell Vivo subscriber for 6
phone, during every months in local calls.
weekend through 2007
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6. Vivo Participações 1Q07 Results
Distribution and coverage leader in
its operational area
Network Coverage
• 100% of the municipalities in Sao Paulo, Rio de
Janeiro and Espirito Santo in both CDMA and
GSM technologies;
• 2,295 municipalities covered against 1,782 of the
8,134 Points of Sale second competitor in our operational area
7,831 • GSM national digital coverage
6,973 Distribution
2.984 5,867 Vivo 303
2.625 • 40% national retail share leadership, 19% above the
2.036 second placed;
C1 111 • More than 338 thousand recharge points;
4.847
4.348
3.831
• New recharge partnerships with Santander and
Bradesco correspondent bank services
C2 99
Vivo C1 C2
Retail Third Party Own Store Post-paid additions Prepaid additions
4%
Sales channels share in the total additions 19% 38% 26%
• 40% of sales to individuals at the company's own
stores, of which postpaid clients accounted for 77%
77%
36%
Vivo's Own Stores Retail Third Party
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7. Vivo Participações 1Q07 Results
Vivo
Operating Performance
Financial Performance
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8. Vivo Participações 1Q07 Results
Customer Base
- 3.7%
- 0.1%
30.138
29.053 29.030
• Best in class solutions in GSM and CDMA.
• Vivo Escolha: 33% of the post-paid individual clients;
• GSM/EDGE Adoption: 16% of the additions in the quarter*;
• Market share leader in its operational area with 30.7%
share of total additions;
• Focus on customer service and satisfaction
1Q06 4Q06 1Q07 • Constant improvement in the services provided
Additions per range
* Including replacements
44% 38%
37% • Focus continues on the acquisition of value customers,
47%
keeping rationality;
25%
9%
• Additions in the high-end were 16p.p higher than 1Q06
1Q06 1Q07
High Medium Low
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9. Vivo Participações 1Q07 Results
Loyalty and Retention
Actions Results
• In the first quarter 2007, Vivo continued its
customer loyalty and retention efforts focusing on
high- and medium-value customers, prepaid and • Even with the maintenance of the competitive
postpaid. pressure in the value segment, the churn remained
stable.
• Use of rewards program for the replacement of
handsets;
• Recharge and traffic incentive through bonuses;
• Right Planning
R$ million
+ 20.5%
Recharges
• 20.5% growth in the financial recharge volume in - 6.1%
1Q07 versus 1Q06.
• Vivo has been investing in the expansion of virtual
credit resellers accounting for 40% of the total
recharge;
922 866
• Vivo's prepaid customers have more than 338 719
thousand recharge points;
• Recharge incentive campaigns such as a "Bonus up
to R$ 1,000 every month paid by Vivo".
1Q06 4Q06 1Q07
recharge financial volume
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10. Vivo Participações 1Q07 Results
SAC*
SAC reduction as a result of greater commercial
and operating efficiency.
1Q07 vs 4Q06
- 20% • 13% SAC reduction due to seasonality and
lower expenses with GSM subsidies;
- 13%
• Reduction of advertising and commissions
125 expenses.
115
100
1Q07 vs 1Q06
• 20% SAC reduction as a result of lower
expenses with subsidies, publicity and advertising;
• Launch of the GSM technology;
1Q06 4Q06 1Q07
• Better commercial agreements with suppliers;
• Exchange rate valuation.
*SAC Blended
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11. Vivo Participações 1Q07 Results
ARPU and MOU Evolution
ARPU MOU
+ 18.1%
+ 10.3%
- 2.0%
- 8.5%
82
30.6 30.0 75
4.2 3.9 68
25.4 38
36
14.2 37
13,7
10,4
44
16,4 16,3 39
15,0 31
1Q06 4Q06 1Q07 1Q06 4Q06 1Q07
Outgoing Inbound B&K Effect Outgoing Inbound
• ARPU maintenance in • Aggressive recharge campaigns
comparison with the 4Q06 and
growth over 1Q06
• Adjusted 1Q07 ARPU 2.9% up
from 1Q06
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12. Vivo Participações 1Q07 Results
Vivo
Operating Performance
Financial Performance
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13. Vivo Participações 1Q07 Results
Net Service Revenue
R$ million
+ 15.4%
- 1.4%
2,647 2,609
359 337
2,262
• 28% growth in the Data Revenue + VAS in
1.226 1.185 comparison with 1Q06;
930
• 20.5% increase in the financial volume of
recharges in 1Q07 x 1Q06 and cost reduction.
1.189 1,263 1.232
143 158 193
1Q06 4Q06 1Q07
Average
Customer 29,920 ∆% 28,790 ∆% 28,997
base - 3.1 + 0.7
Other services Monthly Subscriptions and usage
Network B&K Effect
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14. Vivo Participações 1Q07 Results
Net Data Revenue*
+ 28.0%
+ 21.9%
• The 1Q07 showed a historical record in Vivo's data revenue;
• More than 120,000 full songs sold monthly;
• Vivo is one of the country's largest digital music stores;
• Vivo is the only operator that charges the download
contents, without charging for the traffic;
• Reverse Auction Voice Portal;
1Q06 4Q06 1Q07
• Vivo Location base service to families: more than 10,000
Average
Customer 29,920 ∆% 28,790 ∆% 28,997 customers.
base - 3.1 + 0.7
% of Net
Revenue
7.5% 6.6% 8.2%
* Data Income including VASs
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15. Vivo Participações 1Q07 Results
Operating Expenses*
R$ million
• Cost of Services Rendered
Cost of
Increase in the interconnection cost with the end of the partial
434
Services 733 B&K. Adjusting for this effect, the 1Q07 amount would have
Rendered 716 shown a R$ 43 million reduction in comparison with 1Q06.
156 • H.R.
H.R. 185 Increase over 1Q06 as a result of restructuring expenses.
174
• Cost of Goods Sold
Cost of Goods 433 Better agreements with suppliers, impact of the exchange rate
407
Sold 352 and GSM.
Provision for 161 • Provision for Bad Debt
73 2.7% of Gross Revenue.
Bad Debt 107
• Selling Expenses
Selling 550 Decrease over 1Q06 due to lower third party expenses,
603
Expenses 512 especially commissions and marketing.
General and 129
• General and Administrative Expenses
Administrative 160 21,2% increase over 1Q06 due to higher third party expenses
Expenses 156
1Q07 4Q06 1Q06 Bill & Keep Effect
*Does not include depreciation
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16. Vivo Participações 1Q07 Results
EBITDA and Free Cash Flow
R$ million
EBITDA and Margin Operating Cash Flow *
32.8%
29.7%
27,8%
29,2%
26,6%
13.4
11.2
760
858
717 757
297
1Q06 4Q06 1Q07
- 114
EBITDA Margin Adjusted EBITDA for B&K
Bill&Keep Effects 1Q06 4Q06 1Q07
• Adjusted EBITDA for B&K would have been R$745.8 million in 1Q07
and R$ 844 million in 4Q06. * EBITDA – CAPEX + Change in Working Capital
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17. Vivo Participações 1Q07 Results
Net Results
R$ million
886
136
• 9 times improvement year over year
740 • Extraordinary non recurring items in 4Q06
amounted R$876 million
• Better financial results
10
-19
-179 + 89%
1Q06 4Q06 1Q07
PIS and COFINS Reversal
Credit Activation
Net Income
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18. Vivo Participações 1Q07 Results
Financial Result, Gross Debt and Net Debt
R$ million
Financial Result
1Q07 * - 119 • S&P confirmed Vivo’s rating and change
- 19%
its outlook from "negative" to "stable“
4Q06 - 147
- 36%
• Better financial result as a consequence
of improved interest rates during the period
1Q06 - 186
Net Debt Gross Debt
- 26% - 26%
- 10%
4,464 - 7% 5,483
4,500 4,057
60% • Improvement in the short-term / long-term
3,553 65% 68% profile
3,305
40% 35% 32%
1Q06 4Q06 1Q07 1Q06 4Q06 1Q07
Short Term Long Term
* Without the effect of Fistel payment
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19. Vivo Participações 1Q07 Results
Capex
R$ million
Total Capex & % Capex / Net Revenue
36%
11% 1,059
8%
120
• Quality improvement
134
• GSM/EDGE
• Systems Integration
281 805
235
103
94
86 44
92 98
1Q06 4Q06 1Q07
Network Technology Others
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20. Vivo Participações 1Q07 Results
Final Remarks
"To be the biggest telecommunications operator in Brazil
and one of the biggest in the world is important, but to be the
best in what really matters to the customer is still more
important. Likewise, to be a reference in the development of
high-end technology will make no difference if that technology
does not provide useful services to the customer.
We wish to transform Vivo in an unforgettable customer
experience for both existing and potential new fans."
Roberto Lima
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21. Vivo Participações 1Q07 Results
Safe Harbor Clause Forward Looking Statements
•Some information shows our vision of future and perspectives or objectives, such as
the growth of our subscriber base, the distribution of the various services to be offered
and the results to be achieved. This information is being made available for the sole
purpose of elucidating how we intend to expand our business. Thus, it is not intended to
provide projections for accomplishing such objectives.
•Many factors may distort our actual results in comparison with the objectives that have
been presented, including Brazilian political and economic factors, the development of
competitive technologies, the access to the capital required for achieving our objectives
and the appearance of strong competition in our market areas.
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