tim presentation on jp morgans asia pacific and emerging markets equity conference 2007

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JP Morgan’s Asia Pacific and Emerging Markets Equity Conference 2007New York - September 24-25, 2007 - Mr. Francesco Locati, COO

September 24-25, 2007

New York

TIM Participações S.A.

JP Morgan's Asia Pacific and Emerging Markets Equity Conference 2007

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General Context

TIM General OverviewTIM Strategic ObjectivesMarketing DevelopmentsRegulatory Framework

2Q07 Results

Conclusion

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Brazilian Macroeconomic Scenario Growing economy and widening consumer market

Gross domestic product growth Minimum-salary increase vs. inflation

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

Minimum-salary increase

Inflation

4.5% 4.5%

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

Stability and increase of purchasing power

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

5.7%

2.9%3.7%

4.7% 4.4% 4.2%

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22.0 21.8 20.7 20.5

3.43.02.11.30.7

56.453.247.3

36.426.1

22.0

39.6 39.8 38.8 38.7

65.686.2 99.9 106.7

39.2

46.4

1.22.3

3.95.6 6.5

Fixe

d

Tele

phon

yM

obile

Te

leph

ony

Penetration Rate (Per 100 inhabitants)

Fixed licenseacquiried on

May 2007

Telefonica/PT Telmex / A. Movil Telecom Italia Citi / Pension Funds Finan. Groups

Source: ANATEL.

BroadbandMobileFixed

2003 2004 2005 2006 2Q07 2003 2004 2005 2006 2Q07

BroadbandMobileFixed

Client base (Mln)

Telecom growth driven by mobile and broadbandBrazilian Telecom Market

Main players in the telecom industry

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45.140.5

34.529.1

21.6 23.9

28.4

24.620.5 20.8 23.4 25.4 25.8

17.9 20.7

20.926.5

29.8 29.1

18.723.9

20.2

30.3

26.3

9.513.7

25.4 27.5

8.313.6

Continuous Market Growth

Brazilian Wireless Market

Market Share Performance

-2.6 pp

Source: ANATEL / Company´s data / Competitor´s press releases.

Client Base Performance

1st Player

3rd Player

2003 2004 2005 2006 2Q07

Mln lines

+1.2 pp

-2.6 pp

-27.2 pp

2003 2004 2005 2006 2Q07

1st Player

3rd Player

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30.3

27.5

26.3

2.6

2.8

2.1

29.9

34.6

27.0

18.8

22.0

18.2

25.8%

Share

28.4%

24.6%

30.3%

28.9%

22.5%

Client Base (mln)

Growing customer and revenueService Revenue (R$ bln) ARPU (R$)Postpaid mix (%)2Q07

Brazilian Wireless Market

1st Player

3rd Player

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General Context


2Q07 Results

Conclusion

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TIM Strategic ObjectivesMarket evidence * Strategic goals Initiatives

TIM #1 in service revenues*

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

Mob

ile

lead

ersh

ip

Residual market in lower income classes

To ensure profitability of low ARPU clients

Developing new business model Oriented to low-ARPU customers

Low

-AR

PU

clie

nts

appr

oach

Fixed-line = R$ 47 billion market

To capture fixed-line revenues (increasing share of spending of TIM Brasil customer base)To defend TIM mobile leadership

Con

verg

ence

Segmented OffersIntegrated SolutionsCommunity ConceptStimulating UsagePrepaid Loyalty Promotion

New convergent products:

Home Zone Offer (“TIM Casa”)Internet Access Solution (“TIM Web”)Convergent package Mobile +Fixed +

Internet (“TIM Mais Completo”)

* Considering 2Q07 figures.

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Mobile Leadership: Innovative Marketing StrategyPushing on usage through promotions

► Facing competitors aggressiveness through continuous offer improvement► Working on community concept in order to increase usage

R$ 0.07 per minute for local on-net (also to fixed number)R$0 (free calls) for 500 minutes on-net

Stimulatingintra-network

traffic

“On-Net Traffic” focus

Lowering SAC & Stimulating Usage►TIM chip cost refund subject to recharge within 48 hours from activation► Bonus in minutes according to recharge value so as to stimulateusage

Focusing on retaining customers► Quem tem TIM tem Mais: Loyalty promotion for prepaid clients

► Bonus in minutes for TIM clients that have been in our base formore than 1 year

TIM Chip only& Rechargeincentives

Prepaid Loyalty Promotion

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Mobile Leadership: Continuous Value Added Services InnovationPushing on media content and interactivity

TIM StudioTIM Music Store

User Generated Content

Videos, Images and Music upload and download from the Web

Revenue sharing with content producer (user)

Music Download Wap Portal

Easy-to-download: 1 to 3 clicks maximum

Related contents: songs, videos, wallpapers

TIM Music Club: latest news

Records: Sony&BMG, Universal, Warner and EMI Music

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Fixed to mobile substitution

Very competitive local fixed calls tariffs in the customers home-zone

Low entry point for prepaid and attractive discount for postpaid

Stimulating fixed to mobile substitution

Convergence: Focusing on Customer's Total communication needsMobile Internet

TIM Casa (Home Zone)

SIM Card “Data”

or

Modem USB PCMCIA

+

Devices

Internet Data Packages, also for non-TIM clientsWorks like a pen drive (PC or laptop internet access) Dial-up access substitutionUser-friendly device

TIM WEB

+ +

++ +

Fixed local calls(TIM Casa)

200 Min

Mobile local calls(TIM Brasil plan)

200 Min

LD

40 Min

ModemUSB

Internet

250 MB

SMS

60

MMS

60

TIM Mais Completo

Full communication package combining Mobile Calls + Home Fixed Calls + Internet Access

Enriching TIM convergent service offers

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Developing a new business model

Residual market in lower income social classes

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

93%

28%

59%

11% 31% 58%

High income** Medium income Low income

Mobile Penetration* by social classes

* People more than 10 years old ** According to per capita household income*** Minimum salary = R$350,00 Source: IBGE (PNAD, 2005)

New business model characterized by reduced ownership cost:

Lower air-time prices (leveraging on price/volume elasticity)

Use of extensive, indirect distribution channels

Increase of electronic caring

% ofpopulation

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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 Auction

- 3G bid3G Commercial

offerWi-Max bid

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-

M-M termination rate

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

regulatory environment

Expected upgrade of regulation

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General Context


2Q07 Results

Conclusion

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Total Net Revenue GrowthR$ Mln Reported Organic*

YoY Growth

* Proforma: Adjusted by Bill & Keep elimination starting on January 1st of 2006.

Net Service Revenues Net Handset Revenues

2Q07 Results: Solid Net Service Revenues

Continuous service revenues growth:Total traffic + 43% YoY: focus on

on-net call promotion, stimulating usageCustomer growth +23% YoY

Handset revenues drop confirms the trend of the previous quarters reflecting strong push on ‘TIM Chip Only’ sales

R$

MOU / ARPU PerformanceARPU increase QoQ

Keeping ARPU above the market

2Q07

3,060

2,275

2Q0613% 9%

87% 91%

+34.5% +17.3%

+40.5% +20.2%

-5.8%

1Q07

34.4 34.6

2Q07

Min

2Q07

94

2Q06

81

+16%MOU increase driven by on-net traffic

Increasing usage

+0.7%

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SAC Performance

Lowering SAC despite better level of customer and handset mix:

24.6% YoY growth in postpaid gross addsincreasing % of mid-range and high-end handsets

sold

Reduced subsidy strategy with focus on “TIM Chip Only” offer:

More than 70% of overall gross adds in 2Q07 vs. ~40% in 2Q06

Postpaid SAC oriented to maintain competitiveness

Improved pay-back period:3.3 months in 2Q07 vs 4.7* months in 2Q06

42%30%

58%

70%

2Q06 2Q07

168

CommissionSubsidyAnatel’s fee on

net adds

ComodatoAdvertisingOthers

113

Direct cost Indirect cost

R$ -33%

* Proforma: Bill & Keep elimination starting on January 1st of 2006.

2Q07 Results: Reducing Acquisition Cost

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2Q07 Results: Net Financial PositionNet Debt QoQ Trend

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

OpFCF1Q07

(1,973)(556)

R$ Mln NonOpFCF 2Q07

Net Cash Flow (OpFCF + Non OpFCF)

Positive Operating FCF due to increased profitability

(1,582) 165

R$ Mln

Reported2Q07

Positive Net Cash Flow (+R$390 Mln) excluding seasonal disbursement

(391)440

Net CashFlow

Pro-forma

341 390

AnnualFistel

PaidDividends

Seasonal Impact (R$781 Mln)

Of whichDividends (440)

EBITDA +744CAPEX (324)Δ Oper. WC (255)

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2Q07 Results: Profitability and Bottom Line GrowthEBITDA and EBITDA Margin

+ 4.5 p.p. YoY organic margin growth

Strong service revenue growth offsettingthe seasonality of the period related tocommercial expenses

743.7515.7

743.7

515.7

2Q06 2Q07

44.2%

22.7% *24.3%

Organic EBITDA Margin **

19.8%** 24.3%+R$ 228 million

+4.5 p.p.

EBITDA MarginEBITDA (R$ million)

Net IncomeR$ Mln Positive Bottom Line

+R$273

(239)

342Q06

2Q07Improved operating result

reversal of R$ 273 million in relation to the losses reported in the 2Q06

* Reported EBITDA Margin* * Adjusted by Bill & Keep elimination starting on January 1st of 2006

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General Context


2Q07 Results

Conclusion

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TIM Strong Market PositionInnovation Nationwide

Quality Sustainable Growth

The first mobile operator choiceLeader in average client satisfactionCommitted to constant improvement of brand perception through creation of new customer operations unit

Recognized TIM Brand

Leadership in innovative services

convergent solution (mobile + fixed + internet)Continuous VAS innovation

Only Company with full national presenceLargest GSM operator in number of clientsThe largest mobile data coverage

Continuous value client growthLeader in service revenueSolid YoY Revenue growthLeader in ARPU

Coverage

Strong operational & financial results

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These presentations have been written and presented by TIM Participações S.A. TIM Participações 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.

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tim presentation on jp morgans asia pacific and emerging markets equity conference 2007

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