press release 4 t08 en

Results084Q

February 27th, 2008

1

Main phases of TIM Brasil’s Re-launch Plan

Volume driven strategyFalling ARPMRising bad debtOffering strategy is lacking

2008 1st half 2008 2nd half – 2009 1st quarter 2009 2nd quarter – 2009 2nd half

Lower Profitability

New management teamStrict financial disciplineLaunch of Fixed-Mobile substitution offer

Defend % EBITDA

Loss of Top of Mind/PreferenceDrop in volume share and valueIssue in post-paid segment

Loss of Revenue Share

Brand repositioningNew portfolio of offeringsConverging approach

Growth in Value

Phase 0:RestructuringDifficulty Phase 1:

Re-Launch PlanCurrentPosition

TIM PARTICIPAÇÕES S.A. | Investor Relations

2

Agenda

Claudio Zezza Luca Luciani

Difficulty CurrentPosition

Phase 0:Restructuring Phase 1: Re-Launch

Plan


3

EBITDA margin 4Q08 at 26.2% and 22.2% FY 2008:meeting company's guidance

ARPM increase to R$0.35 (R$/min) in 4Q08

Bad debt 4Q08 at 4.1% of net service revenues:Discipline and stricter credit control (meeting

expected FY ~6%)

SAC reduction: selectivity and efficiency on

acquisition

Slowdown of ARPU erosion in 4Q08: R$29.9 in 4Q08

vs. R$29.7 in 3Q

VAS: +25.5% 4Q08 YoY, reaching 11% of gross service

revenues

..Lights..

4Q08 / 2008 Achievements

…shadows..

Drop in market share (below guidance ~26%)

24.2% of market share in 2008 vs. 25.8% in 2007

Net service revenue FY08 at 5.1% growth, below expectations (guidance >7%):

Lower Postpaid customer base (-200K lines YoY)

Low incidence of post-paid on total gross adds in 4Q08 (13%)

High churn of post-paid (10% in 4Q08)

Mix post-paid at 18.1% 4Q08 (vs. 21.7% in 4Q07)

MOU reduction in 4Q08 (-19% YoY) as consequence of lower push on promotions


4

Rigorous Financial DisciplineEBITDA %: Meeting the company guidance

4Q07 4Q08

890 928

26.4% 26.2%Margin

ARPM Increase

R$ Million

3Q084Q07

143 13198

4Q08

4.7%3.2% 4.1%

3Q08

800

23.8%

Bad Debt Control

96110110

3Q084Q07 4Q08

3.7x3.2xSAC / ARPU 3.2x

SAC Control

110

R$

% Serv. revenues

R$ Million

6.2%FY 08

R$ Cent.

0.32 0.29 0.35

3Q084Q07 4Q08

0.32 0.29 0.35

3Q084Q07 4Q08

33.5%

-8.9%

∆ YoY

∆ QoQ

7.2%

18.0%

∆ YoY

∆ QoQ

4.2%

16.0%

∆ YoY

∆ QoQ

-12%

-13%

∆ YoY

∆ QoQ


5

Solid KPI’sSlowdown of ARPU erosion

4Q07 4Q08

34.5 29.9

VAS (success in innovative services)

R$

3Q08

29.7

TIM WEB (boosting VAS)

~0.20~0.16

1H082007 2008

TIM FIXO* (fresh market)

~0.01

Million accesses

~0.5~0.3

1H082007 2008

~0.2

R$ Million% of gross service revenue

25.5%

17.0%

∆ YoY

∆ QoQ471.3402.9375.4

4Q07 3Q08 4Q08

9.0%9.7%

10.8%

* Including TIM Casa Flex

Million accesses+25%

-13.1%

+1.0%

∆ YoY

∆ QoQ

+70%


6

Customer Base Profile

Million lines

121.0 125.8 133.2 140.8 150.6

31.3 32.5 33.8 35.2 36.4

4Q07 1Q08 2Q08 3Q08 4Q08

+16.5%

∆ YoYMobile Market

TIM

TIM: Market Share Erosion

Post-paid Pre-paid

6.8 6.8 6.8 6.8 6.6

24.5 25.8 27.0 28.4 29.8

31.3 32.5 33.8 35.2 36.4

4Q07 1Q08 2Q08 3Q08 4Q08TIM Market share 25.8 25.9 25.4 25.0 24.2

TIM: more pre-paid Customer Base

TIM Incr. share 25.5 26.5 17.4 18.3 12.1

∆ YoY

Million lines

+24.5%

% Pos / Total 21.7 20.8 20.2 19.4 18.1

-3%

+22%

TIM erosion in market share:Market continues to grow at a very strong pace (+24.5% in lines)TIM reduce its market share to 24.2% Incremental market share down to 12.1% in 4Q08

Mix change towards pre-paid (volume):TIM Customer Base grew-up to 36.4 Mln lines mainly on pre-paid (+22%)Post-paid lines down to 6.6 Mln (-200K lines YoY), representing 18.1% of total Customer Base

TIM erosion in market share:Market continues to grow at a very strong pace (+24.5% in lines)TIM reduce its market share to 24.2% Incremental market share down to 12.1% in 4Q08

Mix change towards pre-paid (volume):TIM Customer Base grew-up to 36.4 Mln lines mainly on pre-paid (+22%)Post-paid lines down to 6.6 Mln (-200K lines YoY), representing 18.1% of total Customer Base


∆ YoY

∆ YoY

7

Revenue Performance

TIM Service Revenue ShareNet Revenue

29.6% 27.5% 27.3%

4Q07 3Q08 4Q08*

R$ Million

3,3762,993 3,186

4Q07 2Q08 3Q08

3,358

1Q08155 321292215276

3,2233,0662,9712,8383,100

3,544

4Q08

Net Service Revenue Net Handsets Revenue

Revenue Growth at 5.1% on a FY basis (below guidance >7%) due to:

lower than expected post-paid growth (post-paid Gross Adds at only 13% of Total in 4Q08)

high churn on post-paid (10% in 4Q08)

MOU reduction in 4Q08 as consequence of lower push on promotions

Revenue Growth at 5.1% on a FY basis (below guidance >7%) due to:

lower than expected post-paid growth (post-paid Gross Adds at only 13% of Total in 4Q08)

high churn on post-paid (10% in 4Q08)

MOU reduction in 4Q08 as consequence of lower push on promotions

+5,3% +5,0%+6,1%+4,1%∆ YoY

YoY %

+4.0%

+16.5%


* Includes net service revenue from Vivo, Claro, TIM, Telemig, Amazônia, Oi and Brt

8

Revenues KPI evolutionMOU

R$

-18% -21%Incoming

Outgoing +9%-19%

ARPM

ARPU

R$

-13%-13%R$

-13%+7%

∆ YoY

∆ YoY:

∆ YoY

-19% -1%Total

Incoming

Outgoing


The 2008 objective was:

Price increase and to contain the

ARPU dilution

Greater discipline towards the

pre-paid promotions that

resulted in pre-paid ARPU

increase

Total ARPU performance mirrors

the mix deteoration

62 70

2625

9586

4Q08 FY08

0.350.31

4Q08 FY08

29.729.9

4Q08 FY08

9

EBITDA YoY performance

R$ Million

EBITDA Margin 26.2%26.4%

Change +4.0% +16.5% +9.5% -1.1% +17.6% +33.5% -5.5%% YoY

890.4

123.0

45.6 (61.4) 11.8 (65.9)(32.7)

927.6

16.7

EBITDA 4Q07 ServiceRevenue

HandsetsRevenue

SellingExpenses

NetworkExpenses

COGS Bad Debt *OtherExpenses

EBITDA 4Q08

• Increase due to higher commercial

activities, advertising exp. and

commissions

Higher handset sale volume (+14% YoY)

Largely impacted by strong credit

collection effort in 4Q07

* Other Expenses include: G&A, Personnel and Net Other Operating Expenses/Revenues


10

From EBITDA to bottom line – 4Q08

Change YoY +4.2%+4.2% +3.3%+3.3% +5.9%+5.9% +153.0%+153.0% n.m.n.m. +65.8%+65.8%

EBITDA 4Q08

DepreciationAmortization

EBIT Net FinancialExpenses

Taxes andOthers Net Income

927.6

305.4

(622.2)

(141.4) 135.6299.6

Tax loss carry forward R$160.2Mn

Growth fueled by higher cost of debt and 3G NPV


R$ Million

11

Net financial position and FCF – 4Q08

R$ Million

Net DebtR$ Million

Operating Free Cash Flow

Gross Debt R$ 3.2 billion (of which 60% long term)~28% of total debt is denominated in foreign currency (fully hedged)

Average annual cost 12.1% in 2008 vs. 11.4% in 2007 (13.2% in 4Q08 vs. 10.9% in 4Q07)

Debt ratio 0.58x - Net debt over 2008 EBITDA

3Q08 OpFCF NonOpFCF

4Q08

+1,072

Positive Net Cash Flow

(2,743) 1,229

(157) (1,670)

EBITDA ΔWkC Capex OpFCF

928

1,229

(782)1,084

3Q07 and 4Q07 figures

(1,788)(1,788) 928928 (92)(92) (952)(952) 890890 1,0441,044 (1,007)(1,007) 9289284Q07 figures


12

On December 1st of 2008, TIM became part of the new portfolio of Bovespa’s

Corporate Sustainability Index (ISE)

ISE is composed by 30 companies out of 394 traded at Bovespa,

comprising only the companies with a strong commitment to sustainability and social responsibility

ISE is based on the international concept of the Triple Bottom Line (TBL), which makes an integrated assessment of companies’

social, environmental and financial elements

Underlining TIM’s commitment on a constant relationship improvement among all its stakeholders and strengthening its

environmental indicators performance

Recognized as one of the national companies more committed to management transparency and which contributes to the

development of a fair social system, environmentally balanced and economically prosperous

Paving a sustainable growth

TIM became part of Bovespa’ s Corporate Sustainability Index (ISE)


13

Agenda



Phase 0:Restructuring Phase 1: Re-launch

Plan


14

Penetration

A Large and Competitive Market

Double-digit market growth

151121

Customer Base

25%

2007 2008

Service Revenue

Churn market... 56 75

Gross Adds

35%

2007 2008

4438

14%

2007 2008

Million lines Billion R$

35 46

Churn

32%

2007 2008

Million lines Million lines

64% 78%

32%

Competition increases with Mobile Number Portability in 2009:17% of population covered in Sep-08 100% by Mar-09

34%Churn

… suffering strong competitive pressure


Player 1

-3%

2007 2008

R$, R$/min

-15%

ARPUARPM

TIM

-13%

2007 2008

R$, R$/min

-13%

Player 2

-7%

2007 2008

R$, R$/min

-23%

34.4 29.7

0.360.31

30.3 29.6

0.340.39

27.3 25.5

0.270.35

15

Loss of TIM Brasil’s competitiveness

Source: Synovate Image Survey Sept-Oct 08* Includes net service revenue from Vivo, Claro, TIM, Telemig, Amazônia, Oi and Brt

46%

11%

18%20%27%26%

Top of Mind

Top of Mind and Preference

Player 2 Player 3 Player 4

21%21%25%

22%

Preference

Player 2 Player 3 Player 4

Mobile Number Portability

IN OUT

Oct-08 Oct-08

MNP%, Sept-Dec 2008

Market Share

(value and volume)

Revenue Share

2006 2008

Market share

2006 2008

29.4% 27.7%25.4% 24.2%

% * %

29.6%

2007

25.8%

2007

High-Value Base (Post-paid)

2006 2008 1Q08 4Q08

21.3% 18.1%20.8%

18.1%

2007

21.7% 19.4%20.2%

2Q08 3Q08

Churn: 10% in 4Q08Gross Adds: 13% post-paid/total in 4Q08

Increasing competitive pressure in 2009

% Post-paid/Base % Post-paid/Base


16

TIM Brasil’s strong fundamentals

Network: leadership in coverage and quality

• voice (coverage and quality)

• data (Edge/ 3G)

High-Value Customer Base (ARPU ~30R$) with proven innovation attitude (VAS 10.8% Gross Service Revenue in 4Q08)

Unique “Pure Mobile” convergence offering

• TIM Web: strong growth (+2.5x of base YoY)

• TIM Fixo: high satisfaction among early adopters

Operating as a“Pure Mobile”

company, with solid fundamentals…

… in line with our DNA

1

2

3


17

Network: leadership in voice and data coverage

* Urban population covered (Jan-09)

Voice Data

Population covered by GSM*

Recovery of Service Quality

59% of high-value customer base covered by 3G (Jan-09) 78% by Dec-09

Native 3.5G (HSDPA) high performance

Largest data network = Edge / UMTS

3G Data Only high quality

93%

90%

88%

88%

Player 2

Player 3

Player 4

Congestion % cells with Grade of Service > 2%

0

2

4

6

8

10

W1 W2Jan Feb March April May June July Aug Sept Oct Nov Dec Jan Jan

“Right on spot”


18

High-Value Customer Base with proven innovation attitude

38%

4%

VAS/ Gross Service Revenue

% Gross Service RevenueMonthly ARPU, R$

ARPU Data Revenue Growth

4Q07 vs. 4Q08

Reversal of ARPU dilution Increase in VAS... ... with push in

data and content

4Q07 1Q08 2Q08 3Q08 4Q08

SMS/MMS

VAS-i


29.8 29.7 29.929.534.5

9.0%8.4%

9.8% 9.7%10.8%

4Q07 1Q08 2Q08 3Q08 4Q08

19

Agenda



Phase 0:Restructuring

Phase 1: Re-launch Plan


20

Three markets, one approach: “Pure Mobile”

Net revenue, Billion R$

Attractiveness Key Success FactorsMain Dynamics

Mobile

Fixed

FixedMobile

44 50

46

811

43

2008 2011

1

5

~5%

~2%

~10%~50% Fresh market

F-M substitution

Churn market

“Innovation”MbpsAlways on

“Convenience”Value for moneyReady to go

“Positioning”BrandSegmentation

96

112

To become the #1 alternative amongHigh-Value Customers

BB


21

Brand: repositioning1

* January-November 2008Source: Ibope Monitor/GRP, Synovate Image Survey Sept/Oct 08

Volume/ Value Positioning

+

-

Bran

d St

reng

th

Brand Standing+

Voice Share

Communication Investment Share

Voice Share + ~70% ATLProduct (corporate support)Coherence and recognition


TV - GRP TIM

% Total Investments TIMLeader

5.9 13.2 13.3

Delta p.p.

23.6%19.1% 17.4%

29.5% 32.3% 30.7%

2006 2007 2008*

20.4%20.1%22.6%

32.6%34.2%40.5%

2006 2007 2008*

Leader

22

Fixed

Web

TV

Fixed

March May …Jan

Internet

MobileCustomer loyaltyPush Post-paid Gross Adds

Segmented approach“Custom” offer

Conver-gence

From F-M substitution to multiple play

Consumer:

Social-demographic segmentationInnovative tariff schemes (less promotion)Integration with devices and VAS

Business:

Segmented convergent offering for:• SOHO• SME• LA

Quick wins New offer portfolio

ConvergenceMobile

Offering portfolio: distinctiveness2


23

Caring: selectivity3

PRE-PAIDPOST-PAID+

-

Cus

tom

er V

alue

Current caring model (ex: Consumer)

Premium

High value

Post-low

A

B

C-E

F/New

Outsourcer

Outsourcer

Customer Care: Key Points

New management model based on access/ value

Strict regulations increase structural costs (and keeps service leverage flat)

Actions:

Quick wins in High Value: personal agent

Service differentiation

Specialization of call centers

Multi-channel vs. Human Touch

MNP Management

Customer loyalty and development of existing clients (CRM)


24

Sales Force: leveraged footprint and higher productivity 4

* Including Ponto TIM

Points of Sale (PoS)

# 000 PoS, Dec 2008

GDO

Dealers

OwnBusinesses*

PoS Productivity by Region

Value channel, Gross Adds/PoS/month

0

100

200

300

R1 R2 R3 R4 R5 R6 R7 R8

Dedicated Time

Customer Value

Own Businesses

Ponto TIM

Dealers

GDO

Alternative

Volume

Service

Pro-activity

Education/ caring

Larger footprint vs. competitorsPush convergence offeringsProduct/offering needs (store traffic)Differentiation (multi-channel)Control (productivity)

Variance and Metric

Average


Player2

Player3

Player4

7.18.59.4 9.0

25

Network: quality and efficiency…5

3G for data transmission

Value driven coverage: ~80% of value base in 2009

Higher 2G quality

Higher capacity (load)

Investment in 2G qualityNetwork cost efficiency to support aggressive 3G roll-out

2G Quality 3G Roll-outEfficient Cost Structure

Rationalization of costs and contract renegotiations

(leased lines, energy, ...)

New transportation model

Rationalization of investments(right-engineering vs. over-engineering)

Choicesmake vs. buy

“Right on spot”


26

2007 2008

…less buy, more make in transmission5

Logic considers transmission network:

• Make, not buy

• Partnerships

LeasedLines

Network CostsMillion R$


15%

30%

21%

27

Organization and team: new, marketing-driven and rapid…6

Marketing

Marketing drivenEnd-to-endPresence at client

LeanStaff simplification (from 12 to 7)Fewer levels (no GD, no regional coordination)Efficiency

Plug and Play

Change management and motivationState of the artYoung (average age: 42 years)

CEO

1

2

3

4

Operations Technology

End-to-endRevenue

National Presence

EfficientPerformance

Reporting to CEO:11


28

...with a new customer-oriented sales structure6

Top clients

COO

Business Consumer

Regions

Business

COO

Consumer RegionalCoord.

Regions

Business Consumer

76

Regions4

Regions2

Sales Structure: 2nd half 2008 Sales Structure: January 2009

# Number of regional operations

3 levels between CEO and regional channelSales structure for each client segment

5 levels between CEO and regional channelsSales structure for each region

GM

CEOCEO

“Think globally, Act locally”

# Number of regional operations


29

The re-launch phases1Q09 2Q09 3Q09 4Q09

ResultsHigh Churn:“Clean” our prepaid and postpaid customer base

Post-paid Subscribers:“back on track” Back to Revenue Growth

New strategy assessment

Organization and Team

Advertising: new format

Push on existing Offers:• TIM Fixo• TIM Web• Existing post-paid offer

Actions

New Offering:• Consumer• Corporate• Convergent

Push on the points of sale

Network optimization

New Caring Model

Convergence: multiple play strategy

Push on Commercial


30

Summary …

To capture the excellent opportunities in the Brazilian market …

… operating as a Pure Mobile company, competing aggressively in the entire telecommunications market: mobile, internet and fixed…

… in order to become the # 1 alternative among high-value customers, through:

• Brand: repositioning• Offering Portfolio: uniqueness• Caring: selectivity• Sales Team: footprint and productivity• Network: quality and efficiency• Organization and team: new, marketing-driven and rapid


31

… and commitments for 2009

Growth in Value Revenue Growth

Operating cash flow(EBITDA – CAPEX)

Top of Mind

Preference

Service Revenue Share

ARPU

Strengthening the Position

Back todouble digit in 2H

Positive

Maintain #2


32

“Safe Harbor” Statements

Statements in this presentation, as well as oral statements made by the management of TIM Participações S.A. (the “Company”, or “TIM”), that are not historical fact constitute “forward looking statements” that involve factors that could cause the actual results of the Company to differ materially from historical results or from any results expressed or implied by such forward looking statements. The Company cautions users of this presentation not to place undue reliance on forward looking statements, which may be based on assumptions and anticipated events that do not materialize.

Statements in this presentation, as well as oral statements made by the management of TIM Participações S.A. (the “Company”, or “TIM”), that are not historical fact constitute “forward looking statements” that involve factors that could cause the actual results of the Company to differ materially from historical results or from any results expressed or implied by such forward looking statements. The Company cautions users of this presentation not to place undue reliance on forward looking statements, which may be based on assumptions and anticipated events that do not materialize.

Investor Relations

Avenida das Américas, 3434 - Bloco 016° andar – Barra da Tijuca22640-102 Rio de Janeiro, RJPhone: +55 21 4009-3742 / 4009-3446 / 4009-4017Fax: +55 21 4009-3990

Investor Relations

Avenida das Américas, 3434 - Bloco 016° andar – Barra da Tijuca22640-102 Rio de Janeiro, RJPhone: +55 21 4009-3742 / 4009-3446 / 4009-4017Fax: +55 21 4009-3990

Visit our Website

http://www.timpartri.com.br


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