TIM BRASIL

MARIO CESAR ARAUJOTIM Brasil CEO

1

TIM BRASIL

MARIO CESAR ARAUJO

Agenda

2006 results highlights

The Brazilian market context

2007-09 Plan overview

Summary

2

TIM BRASIL

MARIO CESAR ARAUJO

… we achieved leadership in

… and maintainedour position of

best-performer on

Customer satisfaction/preferenceAwareness (TIM Brasil regained 2006 Top of Mind among mobile operators)Coverage (TIM Brasil remains the only operator with national coverage)ARPUMarket share of net and gross additionsMarket share of GSM lines

Net service revenues (4Q06)

EBITDA margin

VAS revenues (4Q06)

Business segment customer base

Since we met one year ago…

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TIM BRASIL

MARIO CESAR ARAUJO

Vivo

Claro

Leadership with profitabilityBR GAAP

Service revenues (R$bi, 4Q06)Net share (%, 2006 eop) EBITDA margin (%, FY06)

* Oi and Telemig/Amazonia Celular revenues are estimated

TIM Brasil

25.4%

29.1%

23.9%

Market share

31.7%

30.7%

22.5%

68%

-14%

N/A

24,1% in IAS

Revenue share* ∆% 06-05

38.1%

-5.2%

38.2%

1.9

2.6

2.7

13.3%

23.7%

24.5%

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TIM BRASIL

MARIO CESAR ARAUJO

23.4%

8,784

10,836

2005 2006

25.4

Commitments fulfilled

* Telecom Group Meeting with the Financial Community 2006** Organic Local currency excluding exceptional items

Net revenues growth (%, eop)Subscribers (Mln, eop) EBITDA margin** (%)

2006 target*

20.2

2005 2006

+7.8pp

16.3%

2005 2006

~24 >20% >20%

24.1%26.0%

IAS2006 performance

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TIM BRASIL

MARIO CESAR ARAUJO

Agenda

2006 results highlights

The Brazilian market context

2007-09 Plan overview

Summary

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TIM BRASIL

MARIO CESAR ARAUJO

Growing economy and widening consumer market

Gross domestic product growth Minimum-salary increase vs. inflation

* Government infrastructure investment program to accelerate economySource: EIU, Brazilian Central Bank

Stability and increase of purchasing power

PAC* estimate 4.5% 5.0% 5.0% PAC* inflation estimate 4.1%

Minimum-salary

increase

Inflation

4.5% 4.5%

2.9%3.4%

3.7%4.0%

2.3%

4.9%

2004 2005 2006 2007E 2008E 2009E

5.7%

3.1% 3.9% 4.2%4.1%7.6%

8.3%

15.4%16.7%

2004 2005 2006 2007E 2008E 2009E

Increasing purchasing power of lower income classes

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TIM BRASIL

MARIO CESAR ARAUJO

Regulatory framework

2006 2007 2008-09

Stability of interconnection tariff in the medium term

F-M termination rate

Arbitration ArbitrationFully

Allocated Cost model

Availability of wireless broadband

3G/Wi-Max licensing -

Public consultation +licensing

Commercial deployment

Additional opportunity to consolidate leadership in high-value customer segments

Number Portability (F+M)

- Definition Implementation

Increase of competition in the fixed-line marketUnbundling

Partially regulated Commercially not

viable

Expected upgrade of regulation

Commercially viable

M-M termination rate

B&K(45/55) < JunPay per use > Jul Pay per use Pay per use Positive for a fair

regulatory environment

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TIM BRASIL

MARIO CESAR ARAUJO

Telecom growth driven by mobile and BB

Mobile

Fixed(voice)

Fixed (BB)

Fixed-line losing ground, but still a significant market (~R$46 bn, ~60% of total)Limited competition in fixed-line vs. mobileOpportunity for challengers of fixed-line operators

7.9%

-1.0%

20.5%

Lines (millions) Revenues (R$ bn)

CAGR 06-09

Mobile

Fixed(voice)

Fixed (BB)

10.1%

-3.4%

11.9%

71 7782 85 86

36 36 36

86100

112120 126

4 6 8 9 10

3739

2005 2006 2007E 2008E 2009E

7.9 8.8 9.5

40.6 39.6 38.4 37.3 35.6

25.1 30.3 35.8 38.5 40.5

5.7 6.8

2005 2006E 2007E 2008E 2009E

Source: Internal estimate

6.5% at comparable regulatory framework

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TIM BRASIL

MARIO CESAR ARAUJO

Million lines, gross adds

Residual market in lower income social classes Increase of churn market

* People more than 10 years old** Minimum salary = R$350,00Source: IBGE (PNAD, 2005)

Mobile residual market in lower classes and increase of churnMobile penetration* by social class Gross additions mix evolution

Fresh market

Churn market

43 40 39 38

% of population

Million, %

(> 3 MS**) (1-3 MS) (<1 MS)

93%

28%

59%

11% 31% 58%

High income Medium income Low income

14 11 8 5

33(85%)

31(81%)

29(68%)

29(72%)

2006 2007E 2008E 2009E

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TIM BRASIL

MARIO CESAR ARAUJO

Agenda

2006 results highlights

The Brazilian market context

2007-09 Plan overview

Summary

11

TIM BRASIL

MARIO CESAR ARAUJO

TIM Brasil strategic objectives, guidelines...

Market evidence Strategic goals Guidelines

TIM #1 in service revenues

Consolidate our positioning(revenue growth consistently above market average), increasing profitability

End-to-end segmentation to attract and maintain high value customersOperational efficiency to support customer base expansion

Mob

ile

lead

ersh

ip 1

Residual market in lower income classes

Ensure profitability of low ARPU clients

Develop new business model oriented tolow-ARPU customers

Low

-AR

PU

clie

nts

appr

oach

3

Fixed-line = R$ 46 billion market

Capture fixed-line revenues(increase share of spending on TIM Brasil customer base)Defend TIM mobile leadership

New convergent productsHZ with fixed numberingVirtual PABX Internet broadband access...Co

nver

genc

e 4

2

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TIM BRASIL

MARIO CESAR ARAUJO

... and main targets

Focus on high value customers

Net revenues (R$ bln)Subscribers (mln, eop) EBITDA margin (%)

Improving customer base mix (% post-paid)

Market share 25.4% ~27% 29.4%* ~33%*

Holding voice ARPU Stimulating VAS take-up

Improve efficiency

>10%+>6pp~10% >33

25.4

2006 2009 2006 2009

21.5%

>28%

2006** 2009

* Estimated service revenue share**Net Revenues and Ebitda margin adjusted considering Bill & Keep elimination starting from 01/01/06; Ebitda Margin adjusted also for subsidy deferral impact

~4% from convergence

~1p.p. from Low-ARPU clients approach

BrGaap

CAGR TIM (06-09)

CAGR competitors (06-09)

~7% 10.8

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TIM BRASIL

MARIO CESAR ARAUJO

Mobile leadership: key initiatives of the end-to-end approach focus on 2007

Caring Sales Offer

Business

Post-paid

Improvement of data solutionsMulti-regional/ customized bundling

Improve segmentation: from terminals to tariff plansVAS innovation

On-net community plansChip only

Dedicated BU for LA/Top SME

Zero subsidyChannel mix optimization (e.g. newsstands)

Premium caring (one-to-one) for VIP clients

Alternative channel approach (e.g. web, IVR, SMS)

Pre-paid

ConsumerSubsidies in accordance to offer/customer valueChannel mix optimization (e.g. increase of telesales)

Dedicated people/ skills

New sales opportunities (e.g. inbound VAS up-sell)

Offer/promotion customization

Value/revenue driven commissioning

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TIM BRASIL

MARIO CESAR ARAUJO

Mobile leadership: operational efficiency (fixed costs)

Commercial fixed costs

IndustrialOPEX

G&A

HR

Improve effectiveness of call centre traffic management (Pre-routing) New contract models with 3rd parties call centresContinuing optimization of advertising expenditure

Leverage TIM Brasil existing IP networkUse of alternative technology for BTS connectionSelective IT outsourcing (e.g. data centre, application management)

Rigorous control of non-productive activitiesPositive impact of group restructuring

Limited headcount growth, focused on commercial activitiesProgressive optimization of regional operations

Key initiatives Opportunity (07-09)

32%

33%

11%

19%

% of Fixed Costs (FY06)

~3% reduction of cost per client per year

~20% reduction of cost per minute in the period

~1p.p. reduction of G&A/ net revenues percentage

~18% increase in net revenues/employee

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TIM BRASIL

MARIO CESAR ARAUJO

Low-ARPU clients: increasing need for a new business model

New business models characterized by:Lower air-time prices (leveraging on price/volume elasticity)Lower denomination vouchersUse of extensive, indirect distribution channelsIncrease of electronic caring…

Mobile market worldwide evolution ARPU vs. EBITDA for selected operators

Emerging markets

Developed countries0,3

1,2

2,6

4,0

2,91,70,6

1,1

0,9

0,60,1

0,2

EBIT

DA

Mar

gin

(%)

% of net additions (06E-10E)

86%

14%

Subscribers, bln

Source: Merril Lynch Wireless Matrix (2007), Pyramid

SMART - PhilippinesSonatel

Mobilink PakistanTurkcellMTS

Ukraine

China MobileMTSRussia

0 10 20 30 40 50Monthly ARPU (US$)

1998 2002 2006E 2010E0%

10%

20%

30%

40%

50%

60%

70%

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TIM BRASIL

MARIO CESAR ARAUJO

Our convergence approach: matching different demands with a portfolio of technologies

Residential

LA

SME

High speed dedicated data connection (>10Mbps)100% guaranteed bandwidthLarge number of simultaneous usersHigh customization

Internet connection between 512Kbps and 8Mbps*Cost optimized QoSMedium-low interest of intra-group communicationLimited/affordable customization

TIM technologies/offerData VoiceDedicated linksWiMaxHSPA (in mobility)

PABX Hosting/ ManagementIP Solutions

HomeZone/ GSM

WiMaxHSPAEDGE

Brazilian demand characteristics

Internet connection between 64Kbps and 2Mbps*Low QoSStandard voice telephony (fixed and mobile) with no customization

* Nominal speed connection

WiMaxHSPA

IP SolutionsOffice Zone/ GSM

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TIM BRASIL

MARIO CESAR ARAUJO

CAPEX evolution breakdown

Leveling-off network CAPEX (excluding licenses and convergence plan)

Shift of investments:From roll out to qualityFrom 2G to 3G

BrGaap, R$ Bln

2.6 ~ 5.7

30% 16% 14%

1.6

Network

CAPEX/Net Revenues

CommercialAdministrative

100%=

IT

62% 52%60%

21%

22%

23%

12% 20% 15%2%5% 2%

2005 2006 2007-2009

26%

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TIM BRASIL

MARIO CESAR ARAUJO

TIM Participações Targets (BrGaap)

* Adjusted eliminating subsidy deferral impact ** Includes licences acquisition (3G, Wi-Max)

Total Net Revenues Growth

EBITDA margin

Customer Portfolio (Mln SIM)

CAPEX (Bln Reais)

Op. Free Cash Flow (mln €)

Mkt Share TIM on SIM

20.9 %

24.6 %

1.6 > 2** ~ 5.7**(Cum. ’07-09)

Positive from IIIQ ‘06

Break even(yearly base)

> 17% on Rev.(Year 2009)

2007Targets

2009Targets

2006 Actual

> 10%14.2%

~ 10%

(CAGR ’06-’09)

Adjusted considering Bill&Keep elimination starting from January 1st 2005

21.5%*> 23% > 28%

25.4 ~ 29 > 33

25.4% ~ 26% ~ 27%

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TIM BRASIL

MARIO CESAR ARAUJO

Agenda

2006 results highlights

The Brazilian market context

2007-09 Plan overview

Summary

20

TIM BRASIL

MARIO CESAR ARAUJO

Summary Achieved leadership in service revenues and profitability in 2006

Profitable growth over the next three years to be accomplished by:Consolidating our mobile leadership (focus an high-end customers) and pursuing operational efficiency

Developing a new approach to guarantee profitability of low-ARPU clients

Developing convergent solutions to defend our mobile leadership and capture new revenue streams