vivo - apresentation of 2nd quarter 2007 results

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2Q07 Results Vivo Participações S/AJuly 20, 2007

public copyright©vivo2007


Vivo Participações 2Q07 Results

Highlights

Solid results :

• Repositioning campaign

• Reversal of market share loss

• Churn rate under control

• EBITDA up by 107% YoY

• Net debt down by 23% YoY

• Net result improves by 77% YoY

• Reduction in selling expenses YoY

• Excellent service and network indicators

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Operating PerformanceFinancial PerformanceVivo

Table of contents



34.7% share of net additions in our operational area in 2Q07

125% YoY growth in high-end postpaid additions and 63% growth QoQ

37.3% market share in our operational area*

84% of total activations in GSM/EDGE

50% of postpaid individual base already with Vivo Escolha

2.3% churn rate in the quarter

Customer Base

2Q06 1Q07 2Q07

28,525 29,03030,240

Vivo changed and the market responded

7,911 points of sale

338,000 recharge points

2,311 municipalities covered

Distribution channels

+ 6.0%+ 4.2%

* Source Anatel



33% 33% 42%

43% 34%

43%

24% 24%

24%

2Q06 1Q07 2Q07

Subsidy Commissioning Publicity

*Blended SAC

+ 7%- 16%

SAC*

128

100107

Components

26% reduction in subsidy per unit YOY with the GSM launch

Reduced commissioning in the year

Lower entry barriers

Advantageous handset acquisition agreements



14.4 16.1 16.2

9.7

13.9 13.7

2Q06 1Q07 2Q07

Outgoing Inbound B&K Effect

3139 42

36

36 35

2Q06 1Q07 2Q07

Outgoing Inbound

777567

+ 14.9%+ 2.7%

29.930.0

24.1

+ 24.1%- 0.3%

ARPU MOU

3.9

ARPU and MOU Evolution

4.0

+12.5%

+35.5%

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Table of contents



R$ million

Net Service Revenues

169 201 201

1,147 1,223 1,260

8681,185 1,187

2Q06 1Q07 2Q07

Other Services Subscriptions and usage

Network usage B&K Effect

2,184

2,609 2,648

+ 21.2%

337 358

Data + VAS Revenue

7.9% of net service revenue

15% year-over-year growth

More than 200,000 customers with mobile Internet access

20% growth over the previous quarter

+ 1.5%



*Excluding depreciation

Operating Expenses*R$ million

418

716759

2Q06 1Q07 2Q07

155174 165

2Q06 1Q07 2Q07

547

352

549

2Q06 1Q07 2Q07

339

107 101

2Q06 1Q07 2Q07

664

512627

2Q06 1Q07 2Q07

146 146 162

2Q06 1Q07 2Q07

9.0%2.7% 2.3%

% PDD over gross revenueIncremental PDD

∆% QoQ = - 5.0% ∆% YoY = + 6.2% compensation Collective Union agreement

Severance payments

H. R.

∆% QoQ = +5.9% ∆% YoY = +81.4% third-party services third-party services

Fistel contribution Fistel contribution

adjusted for end of B&K, 2Q07 would be flat over the 2Q06

Cost of Services Rendered349.5

∆% QoQ = - 5.8% ∆% YoY = - 70.1% Strict controls over new costumers acquiredduring the end-of-year campaigns and the the overdue portfolio

Provisions for Bad Debt

Cost of Goods Sold

∆% QoQ = + 56.0% ∆% YoY = + 0.3% number of gross additions

General and Administrative Expenses

∆% QoQ = + 10.8% ∆% YoY = + 11.1%

technical assistance for technical assistance for technology transfers technology transfers rent, insurance legal expensescondominium fees and plant gains in efficiency triggered bymaintenance/conservation the conclusion of the unification of

the systemic platforms

Selling Expenses

∆% QoQ = + 22.5% ∆% YoY = - 5.6% publicity and commissions commissions and public services

third-party services and client-care

325.5349.5

161.5

Bill&Keep Effect



634.2

306.3

757.0

26.6%

21.0%

11.8%

2Q06 1Q07 2Q07

* EBITDA – CAPEX + Change in working capital

29.7%

23.5%

EBITDA Margin adjusted for B&K

217.5296.7

137.6

760

2Q06 2Q071Q07

EBITDA, Cash Flow and Net Result

7.9

Bill&Keep effect

R$ million

EBITDA Margin

2Q06 2Q071Q07

+ 77%

- 493.1

-19.3-112.8

Cash Flow * Net ResultEBITDA

11.2



2Q06 1Q07 2Q072Q06 1Q07 2Q07

Short Term Long Term

3,305.1

4,333.9

68%60%

32% 33%

3,705.7

4,686.4

67%

40%

3,336.3

4,057.2

213.6

118.7

124.4

- 21%

- 9%

- 23%

+ 1%

2Q06

1Q07

2Q07

Financial Result, Gross Debt and Net DebtR$ million

Net DebtGross DebtFinancial Result



11%

8%

13%

139.698.1

190.3

87.6

43.8

46.3

110.7

93.5

100.7

2Q06 1Q07 2Q07

Network Technology Others

337.9 337.3

235.4

CAPEXR$ million

Main Investments

expansion of coverage

increase in data network infrastructure

expansion of virtual recharge partners

São Paulo subway mobile network

new billing format

Total CapEx GSM : 76% absorbed% Capex/Net Revenue

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Table of contents



Rewards Program

Restructuring of Plans

Recovery of suspended customers

customer recapture

Alteration of Recharge MIX

Traffic and recharge incentives through bonuses*:

Actions

0.3p.p. in the churn rate QoQ

18% of recharge volume YoY and 8% QoQ

23% of recharge revenue YoY and 3% QoQ

64% of loyalty/retention through rewards programYoY and 17% QoQ

Loyalty and Retention

Results

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

R$21R$5 R$11 R$16

R$35 R$60 R$100 R$200

Bonus: 10 sms

7d on net

Bonus: 5 sms

Bonus: 5 sms

Bonus: 50 sms

Bonus: 50 sms

Bonus 50 sms

Bonus: 50 sms

* Example of recharge mix with bonuses for the state of São Paulo



Positioning

Signs of change:• National coverage and international roaming• Leadership in mobile internet access• Quality and excellence policy• Brand: The true market leader• Best call quality• Launch of new bill format• Improved customer relations

The results are visible



Final Remarks



• This presentation may contain forward-looking statements concerning future 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 plan 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, including Brazilian political and economic factors, the development of competitive technologies, access to the capital required to achieving those results, and the emergence of strong competition in the markets in which we operate.

Disclaimer

vivo - apresentation of 2nd quarter 2007 results

Investor Relations

2q06 2q06 1q07 2q07

participaes 2q07 results

participaes 2q07 results

public services

yoy net debt

yoy growth

yoy net result

yoy reduction