Corporate Presentation
General Overview
HIGHLIGHTS
• Integrated Telecom Service Provider – 15.1 million wirelines in service (Dec/03) – Over 4.0 million wireless subscribers (Jan/04)
• Concession Area (Region I) - Local Service and PCS – 65% of Brazilian territory/94 million people
– 40% of country’s GDP – Over 20 million households
• Leadership in local services (Region I)
• Domestic and international long distance services
• PCS Mobile services (GSM)
• Data, Corporate & Call Center Services
• Most liquid stock in Bovespa (TNLP4) ~ US$ 57 m / day (Jan/04)
• Most liquid Latam ADR (TNE) ~ US$ 25 m / day (Jan/04)
• High Free Float: 82% of total shares/ADR: 28%
• Market value: US$ 6.2 billion (Jan/04) Region I
Region III Region I I
SHAREHOLDERS’ STRUCTURE
Tele Norte Leste Participações (TNE)
100.0%
81.0%*
100.0%
Telemar Norte Leste -TMAR
100.0%
(Wireless)
* Excludes treasury stock (1.8 % of total shares)
(Wireline)
(Data)
Total outstanding shares (ex-treasury)
381,777 m
Total outstanding shares (ex-treasury)
241,489 mm
CAPITAL STRUCTURE
Tele Norte Leste (TNE) Telemar
Participações** Free float
18.2% 81.8%*
19.9%
11.3%
25.0%
5.0% 5.0%
11.3%
11.3%
11.3%
BNDESPar Fiago AG Telecom
ASSECA Participações
L.F. Tel BrasilCap Brasil Veículos Lexpart Part.
Capital
R$ 4,644 million Common
shares Preferred shares Total shares
130,186 m
390,557 m 260,371 m 1/3
2/3
Total outstanding shares (ex-treasury)
381,777 m
* 13.1% - Annex IV 28.4%
53.4%
Bovespa NYSE (ADR/TNE)
* Excludes treasury stock
PERSONNEL
Fixed & mobile businesses Contact center
full-time employees
31,928
24,206 24,511
21,090
15,490 11,981
10,287 18,082
9,658 28,032
Jul_1998 1998 1999 2000 2001 2003 2003
27,471 28,369
37,690
24,206 31,928
24,511
21,090
* Company’s acquisition
WIRELINE PLATFORM
million lines
Lines in service Lines installed
7.2
8.1 7.8
8.8 9.7 10.5 11.812.8
14.8 18.1
15.1 17.5
15.1
17.4
Jul_1998* 1998 1999 2000 2001 2002 2003
13% CAGR
BROADBAND ACCESS
ISDN
ADSL thousand lines
Dec_02 Mar_03 Jun_03 Sep_03 Dec_03
111
63%
37%
125 53%
47%
143
41%
59%
191
24%
76%
253 14%
86%
Increasing focus on ADSL
Natal
Recife Maceió RR
AM PA
MA
AC
RO
MT
MS
RS PR
SP GO MG
TO
BA PI
CE
PB PE
Porto Alegre
Florianópolis Curitiba Goiânia
Brasília
SE São Luís
Rio de Janeiro Vitória
Salvador Aracajú Terezina
Fortaleza
Paracatu Patrocínio
ES Belém
RN
AL
Uberlândia
SC
Belo Horizonte
São Paulo
Campinas RJ
AP
Montes Claros
• Coverage of 80% of Brazilian Industrial GDP
• Interstate and intrastate transport network
• 18,000 km of fiber optical cables
• 20 integrated metropolitan rings in 18 states
• 350 remote satellite stations
• – 8 Satellite Hubs
• ATM, TDM/SDH and IP Networks Main features
LONG DISTANCE AND DATA TRANSMISSION NETWORK
International connections
International connections
Rio – location of our Network Operations Center (NOC)
João Pessoa
WIRELESS PLATFORM
Prepaid Post-paid
thousand subscribers
Dec_02 Mar_03 Jun_03 Sep_03 Dec_03
Oi – 2.5 million net adds in 2003
80%
20%
1,401
78%
22%
1,722
2,236
80%
20%
2,849
80%
20%
3,893
83%
17%
Net additions (thousands)
Oi’s OPERATING PERFORMANCE
900
321 514
614 1,044
Post-paid Pre-paid
20%
80%
31%
69%
15%
85%
17%
83%
10%
90%
4Q02 1Q03 2Q03
899 321 514
4Q02 1Q03 2Q03
Net additions in Region I (thousand subscribers)
902
470
1,517 1,115
613
3Q03
1,336
3Q03
Total
Share 59% 68% 46% 46% 45%
1,044
4Q03
4Q03 2,340
8.8%
Source: Anatel
Brasil
81.3%
GSM Region I
18.4%
Oi’s MARKET SHARE – DEC/2003
WIRELESS PENETRATION IN BRAZIL – DEC/03
Source: Anatel 45
24 23 23 22 25 20 19
17 16 16 15 15 13
9 9
32 72
40
33
27 27 26 24
19 18
12
RJ MG ES AM RR AP PE RN SE AL PA CE PB BA PI MA SP DF RS MS MT SC GO PR RO AC TO
Source: Anatel
Region II – 31%
Brazil – 26%
Region I – 22%
Region III
WIRELESS PROJECT ROLLOUT ⇒ Oi
• ~ 450 cities covered; 48 million people
• GPRS coverage in 6 main capitals
• 3,141 sites (BTS)
• CAPEX optimization (co-siting: 1,700 BTS)
• International roaming
• Main suppliers: Nokia, Siemens, Alcatel, Ericsson
• 1,809 points of sales (breaking exclusivity of A & B band agreements)
• Diversified channels with high capillarity
– Retail, specialized agents/dealers, stores, telesales
• Corporate sales effort combined with Telemar
• Tight headcount structure: 990 employees
• Infrastructure sharing
• Outsourcing (including call centers)
• Synergies with Telemar
• Strong brand name Coverage
Distribution
Resource optimization
Coverage focused on profitable areas
Consumer and corporate focus through high
capillarity and diversity of channels
Focus on profitable
growth, minimizing OPEX and CAPEX
6,946
5,158
8,433
6,222
10,851 8,122
13,660
10,103
16,091*
11,874
19,427
14,003
1998 1999 2000 2001 2002 2003
REVENUES
R$ million
Gross revenue Net revenue
22.1% CAGR
* Wireless startup from 2H02
3,469 3,487 4,090
6,545 6,521
7,782
1998 1999 2000 2001 2002 2003
COSTS & EXPENSES
R$ million
17.5% CAGR
1,689
2,735
4,032
3,558
5,353
6,221
1998 1999 2000 2001 2002 2003
EBITDA
R$ million
EBITDA Margin
33%
44% 50% 35% 45% 44%
98 99 00 01 02 03
29.8% CAGR
EMPLOYEE PRODUCTIVITY – TMAR
66 112 177 203 504
644
200 255
356
561
1,022
1,392
322 397
560 984
1,597 1,747 Lines in Service/Employee
+443%
Net Revenue/Average Employee R$ thousand
+596%
EBITDA/Average Employee R$ thousand
+876%
1998 1999 2000 2001 2002 2003 1998 1999 2000 2001 2002 2003 1998 1999 2000 2001 2002 2003
WIRELINE PRODUCTIVITY – TMAR
R$
ALIS: Average Lines in Service
234
317
379 270
379 394
483
405 385 474
388
458
Costs & Expenses /ALIS EBITDA/ALIS Net Revenue/ ALIS
717 722 764
744 767
852
1998 1999 2000 2001 2002 +19%
-5%
+68%
1998 1999 2000 2001 2002
1998 1999 2000 2001 2002 2003 2003 2003
7,888 2,172
1,086 945
1,128 554
1998 1999 2000 2001 2002 2003
CAPITAL EXPENDITURES (CAPEX)
R$ million
Wireline Wireless
2,500 2,244 2,804
10,060
2,031
1,682 CAPEX/Sales
49%
36% 35%
17% 12%
100%
98 99 00 01 02 03
CAPITAL EXPENDITURES (CAPEX)
US$ million
2,095
1,236
1,532
4,278
692 548
10,381
1998 1999 2000 2001 2002 2003 Total
FINANCIAL RESULTS
R$ million
Financial revenues
Financial expenses
Interest on loans/debentures Monetary & exchange variations Banking Fees & contingencies PIS & Cofins
Other
Net Financial result
4Q02 1Q03
133
(586) (265) (164) (108) (31) (18) (452) 75
(521) (248) 12 (151) (116) (17) (446)
4Q03 201
(807) (217) (359) (135) 2 (98) (606) 2Q03
134
(651) (232) (220) (127) (29) (43) (518)
163
(693) (197) (224) (151) (76) (46) (530) 3Q03
DEBT POSITION
R$ million
Total Debt
• Short term
• Long term (-) Cash
(-) Long term financial invest.
(=) Net debt
Dec/03
Dec/02 Jun/03 Sep/03
12,160 2,662 9,498 (4,325)
- 7,835 10,774
1,769 9,006 (1,513) (141) 9,121
11,394 2,264 9,130 (1,789) (86) 9,519
11,153 2,606 8,547 (2,412) (86) 8,655
A 9% reduction in 4Q03 (-R$ 820 million) Mar/03
11,616 2,053 9,563 (1,479) (132) 10,005
DEBT REPAYMENT SCHEDULE (DEC/03)
R$ million
2,662 2,616
3,269
1,122
585
1,906
2004 2005 2006 2007 2008 2009
Total debt = 12,160
% of total 21.9 21.5 26.9 9.2 4.8 15.7
FC:9,049 LC:3,111
OPERATING CASH FLOW MARGINS
697 600
185 1,291
295 1,184
290 1,373
912 691
4Q02 1Q03 2Q03 3Q03 4Q03
1,663
1,297
1,476 1,479
1,603 R$ million
EBITDA
CAPEX Margin
Growth Strategy & Outlook 2004
Local Wireline
Wireless (GSM) Data &
Corporate
Long Distance
Integrated Offer of Telecom
Services
GROWTH STRATEGY
OUTLOOK 2004
• Network (YE)
– Wireline 15.1 million lines in service – Wireless 5.4 million subscribers – ADSL 450,000 customers
• Net debt ~R$ 7.0 billion (YE)
• Bad debt ~3.0% gross revenues
• EBITDA ~43%of Gross Revenue
• Capex R$ 2.0 – 2.3 billion (60% -TMAR /35% - Oi)
“SAFE HARBOR” STATEMENT
Investor Relations
Rua Humberto de Campos, 425 / 8º andar Leblon
Rio de Janeiro -RJ
Phone: ( 55 21) 3131-1314/1313/1315/1317 Fax: (55 21) 3131-1155
E-mail: [email protected]
Visit our website: http://www.telemar.com.br/ir
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
