Tim Presentation On Jp Morgans Asia Pacific And Emerging Markets Equity Conference 2007

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<ul><li><p>1</p><p>JP Morgans Asia Pacific and Emerging Markets Equity Conference 2007New York - September 24-25, 2007 - Mr. Francesco Locati, COO</p><p>September 24-25, 2007</p><p>New York</p><p>TIM Participaes S.A.</p><p>JP Morgan's Asia Pacific and Emerging Markets Equity Conference 2007</p></li><li><p>2</p><p>JP Morgans Asia Pacific and Emerging Markets Equity Conference 2007New York - September 24-25, 2007 - Mr. Francesco Locati, COO</p><p>General Context</p><p>TIM General OverviewTIM Strategic ObjectivesMarketing DevelopmentsRegulatory Framework</p><p>2Q07 Results</p><p>Conclusion</p></li><li><p>3</p><p>JP Morgans Asia Pacific and Emerging Markets Equity Conference 2007New York - September 24-25, 2007 - Mr. Francesco Locati, COO</p><p>Brazilian Macroeconomic Scenario Growing economy and widening consumer market</p><p>Gross domestic product growth Minimum-salary increase vs. inflation</p><p>PAC* estimate 4.5% 5.0% 5.0% PAC* inflation estimate 4.1%</p><p>Minimum-salary increase</p><p>Inflation</p><p>4.5% 4.5%</p><p>2004 2005 2006 2007E 2008E 2009E</p><p>5.7%</p><p>3.1% 3.9%4.2%4.1%7.6%</p><p>8.3%</p><p>15.4%16.7%</p><p>2004 2005 2006 2007E 2008E 2009E</p><p>Increasing purchasing power of lower income classes</p><p>Stability and increase of purchasing power</p><p>Government infrastructure investment program to accelerate economySource: EIU, Brazilian Central Bank</p><p>5.7%</p><p>2.9%3.7%</p><p>4.7% 4.4% 4.2%</p></li><li><p>4</p><p>JP Morgans Asia Pacific and Emerging Markets Equity Conference 2007New York - September 24-25, 2007 - Mr. Francesco Locati, COO</p><p>22.0 21.8 20.7 20.5</p><p>3.43.02.11.30.7</p><p>56.453.247.3</p><p>36.426.1</p><p>22.0</p><p>39.6 39.8 38.8 38.7</p><p>65.686.2 99.9</p><p>106.7</p><p>39.2</p><p>46.4</p><p>1.22.3</p><p>3.95.6 6.5</p><p>Fixe</p><p>d </p><p>Tele</p><p>phon</p><p>yM</p><p>obile</p><p> Te</p><p>leph</p><p>ony</p><p>Penetration Rate (Per 100 inhabitants)</p><p>Fixed licenseacquiried on</p><p>May 2007</p><p>Telefonica/PT Telmex / A. Movil Telecom Italia Citi / Pension Funds Finan. Groups </p><p>Source: ANATEL.</p><p>BroadbandMobileFixed</p><p>2003 2004 2005 2006 2Q07 2003 2004 2005 2006 2Q07</p><p>BroadbandMobileFixed</p><p>Client base (Mln)</p><p>Telecom growth driven by mobile and broadbandBrazilian Telecom Market</p><p>Main players in the telecom industry</p></li><li><p>5</p><p>JP Morgans Asia Pacific and Emerging Markets Equity Conference 2007New York - September 24-25, 2007 - Mr. Francesco Locati, COO</p><p>45.140.5</p><p>34.529.1</p><p>21.6 23.9</p><p>28.4</p><p>24.620.5 20.823.4 25.4 25.8</p><p>17.9 20.7</p><p>20.926.5</p><p>29.8 29.1</p><p>18.723.9</p><p>20.2</p><p>30.3</p><p>26.3</p><p>9.513.7</p><p>25.4 27.5</p><p>8.313.6</p><p>Continuous Market Growth</p><p>Brazilian Wireless Market </p><p>Market Share Performance</p><p>-2.6 pp</p><p>Source: ANATEL / Companys data / Competitors press releases.</p><p>Client Base Performance</p><p>1st Player</p><p>3rd Player</p><p>2003 2004 2005 2006 2Q07</p><p>Mln lines</p><p>+1.2 pp</p><p>-2.6 pp</p><p>-27.2 pp</p><p>2003 2004 2005 2006 2Q07</p><p>1st Player</p><p>3rd Player</p></li><li><p>6</p><p>JP Morgans Asia Pacific and Emerging Markets Equity Conference 2007New York - September 24-25, 2007 - Mr. Francesco Locati, COO</p><p>30.3</p><p>27.5</p><p>26.3</p><p>2.6</p><p>2.8</p><p>2.1</p><p>29.9</p><p>34.6</p><p>27.0</p><p>18.8</p><p>22.0</p><p>18.2</p><p>25.8%</p><p>Share</p><p>28.4%</p><p>24.6%</p><p>30.3%</p><p>28.9%</p><p>22.5%</p><p>Client Base (mln)</p><p>Growing customer and revenueService Revenue (R$ bln) ARPU (R$)Postpaid mix (%)2Q07 </p><p>Brazilian Wireless Market </p><p>1st Player</p><p>3rd Player</p></li><li><p>7</p><p>JP Morgans Asia Pacific and Emerging Markets Equity Conference 2007New York - September 24-25, 2007 - Mr. Francesco Locati, COO</p><p>General Context</p><p>TIM General OverviewTIM Strategic ObjectivesMarketing DevelopmentsRegulatory Framework</p><p>2Q07 Results</p><p>Conclusion</p></li><li><p>8</p><p>JP Morgans Asia Pacific and Emerging Markets Equity Conference 2007New York - September 24-25, 2007 - Mr. Francesco Locati, COO</p><p>TIM Strategic ObjectivesMarket evidence * Strategic goals Initiatives</p><p>TIM #1 in service revenues*</p><p>To consolidate our positioning (revenue growth consistently above market average), increasing profitability</p><p>Mob</p><p>ile </p><p>lead</p><p>ersh</p><p>ip</p><p>Residual market in lower income classes</p><p>To ensure profitability of low ARPU clients</p><p>Developing new business model Oriented to low-ARPU customers</p><p>Low</p><p>-AR</p><p>PU </p><p>clie</p><p>nts </p><p>appr</p><p>oach</p><p>Fixed-line = R$ 47 billion market</p><p>To capture fixed-line revenues (increasing share of spending of TIM Brasil customer base)To defend TIM mobile leadership</p><p>Con</p><p>verg</p><p>ence</p><p>Segmented OffersIntegrated SolutionsCommunity ConceptStimulating UsagePrepaid Loyalty Promotion</p><p>New convergent products:</p><p>Home Zone Offer (TIM Casa)Internet Access Solution (TIM Web)Convergent package Mobile +Fixed + </p><p>Internet (TIM Mais Completo)</p><p>* Considering 2Q07 figures.</p></li><li><p>9</p><p>JP Morgans Asia Pacific and Emerging Markets Equity Conference 2007New York - September 24-25, 2007 - Mr. Francesco Locati, COO</p><p>Mobile Leadership: Innovative Marketing StrategyPushing on usage through promotions </p><p> Facing competitors aggressiveness through continuous offer improvement Working on community concept in order to increase usage</p><p>R$ 0.07 per minute for local on-net (also to fixed number)R$0 (free calls) for 500 minutes on-net</p><p>Stimulatingintra-network</p><p>traffic</p><p>On-Net Traffic focus</p><p>Lowering SAC &amp; Stimulating UsageTIM chip cost refund subject to recharge within 48 hours from activation Bonus in minutes according to recharge value so as to stimulateusage</p><p>Focusing on retaining customers Quem tem TIM tem Mais: Loyalty promotion for prepaid clients </p><p> Bonus in minutes for TIM clients that have been in our base formore than 1 year </p><p>TIM Chip only&amp; Rechargeincentives</p><p>Prepaid Loyalty Promotion</p></li><li><p>10</p><p>JP Morgans Asia Pacific and Emerging Markets Equity Conference 2007New York - September 24-25, 2007 - Mr. Francesco Locati, COO</p><p>Mobile Leadership: Continuous Value Added Services InnovationPushing on media content and interactivity</p><p>TIM StudioTIM Music Store</p><p>User Generated Content</p><p>Videos, Images and Music upload and download from the Web</p><p>Revenue sharing with content producer (user)</p><p>Music Download Wap Portal</p><p>Easy-to-download: 1 to 3 clicks maximum</p><p>Related contents: songs, videos, wallpapers</p><p>TIM Music Club: latest news</p><p>Records: Sony&amp;BMG, Universal, Warner and EMI Music</p></li><li><p>11</p><p>JP Morgans Asia Pacific and Emerging Markets Equity Conference 2007New York - September 24-25, 2007 - Mr. Francesco Locati, COO</p><p>Fixed to mobile substitution</p><p>Very competitive local fixed calls tariffs in the customers home-zone</p><p>Low entry point for prepaid and attractive discount for postpaid </p><p>Stimulating fixed to mobile substitution</p><p>Convergence: Focusing on Customer's Total communication needsMobile Internet</p><p>TIM Casa (Home Zone)</p><p>SIM Card Data</p><p>or</p><p>Modem USB PCMCIA</p><p>+</p><p>Devices</p><p>Internet Data Packages, also for non-TIM clientsWorks like a pen drive (PC or laptop internet access) Dial-up access substitutionUser-friendly device</p><p>TIM WEB</p><p>+ +</p><p>++ +</p><p>Fixed local calls(TIM Casa)</p><p>200 Min</p><p>Mobile local calls(TIM Brasil plan)</p><p>200 Min</p><p>LD</p><p>40 Min</p><p>ModemUSB </p><p>Internet</p><p>250 MB</p><p>SMS</p><p>60</p><p>MMS</p><p>60</p><p>TIM Mais Completo</p><p>Full communication package combining Mobile Calls + Home Fixed Calls + Internet Access</p><p>Enriching TIM convergent service offers</p></li><li><p>12</p><p>JP Morgans Asia Pacific and Emerging Markets Equity Conference 2007New York - September 24-25, 2007 - Mr. Francesco Locati, COO</p><p>Developing a new business model </p><p>Residual market in lower income social classes</p><p>(&gt; 3 MS***) (1-3 MS) (</p></li><li><p>13</p><p>JP Morgans Asia Pacific and Emerging Markets Equity Conference 2007New York - September 24-25, 2007 - Mr. Francesco Locati, COO</p><p>Regulatory Framework</p><p>2006 2007 2008-09</p><p>Stability of interconnection tariff in the medium term</p><p>F-M termination rate</p><p>Arbitration ArbitrationFully </p><p>Allocated Cost model</p><p>Availability of wireless broadband</p><p>3G/Wi-Max Auction</p><p>- 3G bid3G Commercial </p><p>offerWi-Max bid</p><p>Additional opportunity to consolidate leadership in high-value customer segments</p><p>Number Portability (F+M)</p><p>- Definition Implementation</p><p>Increase of competition in the fixed-line marketUnbundling </p><p>Partially regulated Commercially not </p><p>viable-</p><p>M-M termination rate</p><p>B&amp;K(45/55) &lt; JunPay per use &gt; Jul Pay per use Pay per use</p><p>Positive for a fair regulatory environment</p><p>Expected upgrade of regulation</p></li><li><p>14</p><p>JP Morgans Asia Pacific and Emerging Markets Equity Conference 2007New York - September 24-25, 2007 - Mr. Francesco Locati, COO</p><p>General Context</p><p>TIM General OverviewTIM Strategic ObjectivesMarketing DevelopmentsRegulatory Framework</p><p>2Q07 Results</p><p>Conclusion</p></li><li><p>15</p><p>JP Morgans Asia Pacific and Emerging Markets Equity Conference 2007New York - September 24-25, 2007 - Mr. Francesco Locati, COO</p><p>Total Net Revenue GrowthR$ Mln Reported Organic*</p><p>YoY Growth </p><p>* Proforma: Adjusted by Bill &amp; Keep elimination starting on January 1st of 2006.</p><p>Net Service Revenues Net Handset Revenues</p><p>2Q07 Results: Solid Net Service Revenues</p><p>Continuous service revenues growth:Total traffic + 43% YoY: focus on </p><p>on-net call promotion, stimulating usageCustomer growth +23% YoY</p><p>Handset revenues drop confirms the trend of the previous quarters reflecting strong push on TIM Chip Only sales</p><p>R$ </p><p>MOU / ARPU PerformanceARPU increase QoQ</p><p>Keeping ARPU above the market</p><p>2Q07</p><p>3,060</p><p>2,275</p><p>2Q0613% 9%</p><p>87% 91%</p><p>+34.5% +17.3%</p><p>+40.5% +20.2%</p><p>-5.8%</p><p>1Q07</p><p>34.4 34.6</p><p>2Q07</p><p>Min</p><p>2Q07</p><p>94</p><p>2Q06</p><p>81</p><p>+16%MOU increase driven by on-net traffic</p><p>Increasing usage</p><p>+0.7%</p></li><li><p>16</p><p>JP Morgans Asia Pacific and Emerging Markets Equity Conference 2007New York - September 24-25, 2007 - Mr. Francesco Locati, COO</p><p>SAC Performance</p><p>Lowering SAC despite better level of customer and handset mix:</p><p>24.6% YoY growth in postpaid gross addsincreasing % of mid-range and high-end handsets </p><p>sold</p><p>Reduced subsidy strategy with focus on TIM Chip Only offer: </p><p>More than 70% of overall gross adds in 2Q07 vs. ~40% in 2Q06</p><p>Postpaid SAC oriented to maintain competitiveness</p><p>Improved pay-back period:3.3 months in 2Q07 vs 4.7* months in 2Q06</p><p>42%30%</p><p>58%</p><p>70%</p><p>2Q06 2Q07</p><p>168</p><p>CommissionSubsidyAnatels fee on </p><p>net adds</p><p>ComodatoAdvertisingOthers</p><p>113</p><p>Direct cost Indirect cost</p><p>R$ -33%</p><p>* Proforma: Bill &amp; Keep elimination starting on January 1st of 2006.</p><p>2Q07 Results: Reducing Acquisition Cost</p></li><li><p>17</p><p>JP Morgans Asia Pacific and Emerging Markets Equity Conference 2007New York - September 24-25, 2007 - Mr. Francesco Locati, COO</p><p>2Q07 Results: Net Financial PositionNet Debt QoQ Trend</p><p>Gross Debt: R$2.3 billion (of which 89% long term / average annual cost of 11.66% p.y. in 2Q07)Cash and equivalents: R$0.3 billionNet Debt: R$2.0 billion </p><p>OpFCF1Q07</p><p>(1,973)(556)</p><p>R$ Mln NonOpFCF 2Q07</p><p>Net Cash Flow (OpFCF + Non OpFCF)</p><p>Positive Operating FCF due to increased profitability</p><p>(1,582) 165</p><p>R$ Mln</p><p>Reported2Q07</p><p>Positive Net Cash Flow (+R$390 Mln) excluding seasonal disbursement</p><p>(391)440</p><p>Net CashFlow</p><p>Pro-forma</p><p>341 390</p><p>AnnualFistel</p><p>PaidDividends</p><p>Seasonal Impact (R$781 Mln)</p><p>Of whichDividends (440)</p><p>EBITDA +744CAPEX (324) Oper. WC (255)</p></li><li><p>18</p><p>JP Morgans Asia Pacific and Emerging Markets Equity Conference 2007New York - September 24-25, 2007 - Mr. Francesco Locati, COO</p><p>2Q07 Results: Profitability and Bottom Line GrowthEBITDA and EBITDA Margin</p><p>+ 4.5 p.p. YoY organic margin growth </p><p>Strong service revenue growth offsettingthe seasonality of the period related tocommercial expenses</p><p>743.7515.7</p><p>743.7</p><p>515.7</p><p>2Q06 2Q07</p><p>44.2%</p><p>22.7% *24.3%</p><p>Organic EBITDA Margin **</p><p>19.8%** 24.3%+R$ 228 million</p><p>+4.5 p.p.</p><p>EBITDA MarginEBITDA (R$ million) </p><p>Net IncomeR$ Mln Positive Bottom Line</p><p>+R$273</p><p>(239)</p><p>342Q06</p><p>2Q07Improved operating result</p><p>reversal of R$ 273 million in relation to the losses reported in the 2Q06 </p><p>* Reported EBITDA Margin* * Adjusted by Bill &amp; Keep elimination starting on January 1st of 2006</p></li><li><p>19</p><p>JP Morgans Asia Pacific and Emerging Markets Equity Conference 2007New York - September 24-25, 2007 - Mr. Francesco Locati, COO</p><p>General Context</p><p>TIM General OverviewTIM Strategic ObjectivesMarketing DevelopmentsRegulatory Framework</p><p>2Q07 Results</p><p>Conclusion</p></li><li><p>20</p><p>JP Morgans Asia Pacific and Emerging Markets Equity Conference 2007New York - September 24-25, 2007 - Mr. Francesco Locati, COO</p><p>TIM Strong Market PositionInnovation Nationwide</p><p>Quality Sustainable Growth</p><p>The first mobile operator choiceLeader in average client satisfactionCommitted to constant improvement of brand perception through creation of new customer operations unit</p><p>Recognized TIM Brand </p><p>Leadership in innovative services</p><p>convergent solution (mobile + fixed + internet)Continuous VAS innovation</p><p>Only Company with full national presenceLargest GSM operator in number of clientsThe largest mobile data coverage</p><p>Continuous value client growthLeader in service revenueSolid YoY Revenue growthLeader in ARPU</p><p>Coverage</p><p>Strong operational &amp; financial results</p></li><li><p>21</p><p>JP Morgans Asia Pacific and Emerging Markets Equity Conference 2007New York - September 24-25, 2007 - Mr. Francesco Locati, COO</p><p>These presentations have been written and presented by TIM Participaes S.A. TIM Participaes S.A. is solely responsible for the accuracy and completeness of the contents of such presentations and/or other documents. JPMorgan does not have any responsibility for or control over the contents of such presentations and/or other documents. No endorsement is intended or implied notwithstanding the distribution of the presentations and/or other documents at the JPMorgan Asia Pacific Conference / Corporate Access Day. The materials and information in the presentations and other documents are for informational purposes only, and are not an offer or solicitation for the purchase or sale of any securities or financial instruments or to provide any investment service or investment advice.</p><p>Presentation Disclaimer</p></li></ul>

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