tne celebrates its 10th listing anniversary at nyse -...
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TNE Celebrates its 10th Listing Anniversaryat NYSE
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Oi’s Vision
“Best service provider company; one that gets close to the people and generates value for its customers, employees, shareholders and society in general.”
Oi’s Values
• Meritocracy: Your contribution and recognition have no limits. • Confidence: You don’t get it from people, you earn it. • Integrity: Ethics and humility are essential. • Simplicity: Simplicity brings speed, leading to success. • Team: No one on its own is better than all together. • People: Smart people attract other smart people. The opposite is also true. • Results: There is no substitute for profit. • Success: Success built by all is success shared by all. • Excellence: Acquiring and sharing knowledge is what distinguishes You and our company. • Company motto: The customer is always right.
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1Profile
Oi is the largest telecommunications company in Brazil by gross revenues and number of installed fixed lines, and the largest wireline company in South America based on the total number of lines in service. The company was the first in the country to offer convergent and integrated telecommunications services.Its offers comprise wireline and wireless segments, data communications, internet and subscription TV service in Minas Gerais.
Oi’s image reflects a lifestyle linked to boldness, innovation, reliability and intelligence. The “As simple as that” slogan summarizes the company’s identity.
The objective of the Company is to offer the most modern possibilities in telecommunications and exceed the demands of customers and those of the market. Oi invests heavily in the development of new technologies and the training of its employees. Everything needed to ensure the best service to its customers.
Through Telemar Norte Leste S.A., the Oi group has the concession to operate local wireline services in 16 States in the Northern, Northeastern and Southeastern regions. Its wholly-owned subsidiary, TNL PCS, is authorized to offer wireless services in 17 States – the same 16 as well as São Paulo, where it launched operations on October 24, 2008.
Telemar Norte Leste S.A. is also authorized to operate in the whole country, offering data, internet, and long distance communication services with code 31.
In 2007, after concluding the acquisition of Way TV, a television operator via subscriptions and broadband, Oi became the first quadruple play company in Brazil, with convergent offers in wireline and wireless operations, broadband internet and video transmission. Oi TV is present in Belo Horizonte, Poços de Caldas, Barbacena and Uberlândia.
At the end of September 2008, Oi had about 37.8 million users, distributed as follows: 13.9 million wireline clients; 21.9 million in wireless and 1.9 million in Oi Velox broadband.
On April 25, 2008, Oi announceda proposal to buy shareholder control of Brasil Telecom Participações. After Anatel’s previous consent, the new company will be among the main global telecom players and will have greater scale and operational efficiency, featuring an integrated platform in the whole of Brazil. The consolidation of Brasil Telecom should significantly boost its liquidity on the Stock Exchange.
Getting Familiar TO Oi
Forerunner in convergent plans, Oi is characterized by simple and creative solutions
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Oi History
1998
• Telebrás System was privatized. Telemar is born, operating in 64% of Brazil (16 companies in 16 Brazilian States). 2001
• Corporate reorganization at the 16 companies, resulting in the merging of the operational subsidiaries in just one company named Telemar Norte Leste S.A., the operational subsidiary for telecommunications of Tele Norte Leste Participações.
• Forecasted for the end of 2003, Telemar concludes Anatel´s goals ahead of schedule. 2002
• In June TNL PCS operations start – the group’s wireless arm. In December, Oi reaches 1.4 million wireless customers. 2004
• The company hits the 5 million wireless customers mark, becoming the leader in the market where it operates. 2005
• Launch of Oi Internet and Oi FM, the first interactive radio in the country. 2006
• Acquisition of Way TV – a cable TV and broadband company in 4 cities in Minas Gerais State.
• Launch of Oi Paggo, the first wireless-based credit card. 2007
• “Oi” becomes the group’s single brand, starting to be used for all services.
• In May, the Company obtains an investment grade rating by Fitch Ratings.
• Oi is authorized by Anatel to control Way TV, thus presenting the Oi TV brand.
• Purchase of licenses to start 2G operations in São Paulo and acquisition of frequencies to operate 3G services in Region I and São Paulo.
• The company acquires Paggo Empreendimentos S.A. and announces its intention to acquire TNCP, parent company of Amazônia Celular. 2008
• Oi receives consent from Anatel to acquire control of TNCP.
• Announcement of proposal to purchase shareholder control of Brasil Telecom Participações.
• Launch of 3G offers in Region I.
• Implementation of mobility services in São Paulo.
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Convergent services for all segments – created based on our customer’s real needs
As the first integrated telecom company in Brazil, it has been possible for Oi to alter the operational approach, from a product-based perspective to a customer-based one, with a view of providing them with the best possible services and becoming their first choice in telecoms services. In addition to the operational and financial synergies, the company’s integration allows us to offer integrated and convergent services, that contribute to customer loyalty, as well as the scale needed to compete in the sector.
Operating under the single brand Oi, launched in 2007, the group offers its customers a broad range of options in the business lines of fixed and mobile telephony, broadband, internet and entertainment, seeking to render convergent services with great simplicity, recognition and efficiency, and thereby strengthening the company’s competitive position.
Retail Market – Business-to-Consumer
Residential customers have access to an innovative and varied portfolio of integrated services comprised of fixed and mobile telephony, internet and entertainment. The opportunity of convergence makes it easier to manage the telecoms services consumed. By means of a segmented approach, Oi provides the most complete range of services in their region, combining convenience and value.
Corporate Market – Business-to-Business
As with the residential market, Oi has adopted a segmented approach to the business market, offering a variety of services to small, medium and large-scale companies, the government and other telecom operators. Providing integrated services is also central to the activities of corporate areas; we focus on continuously improving quality and consolidating the relationship with the client.
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Strategy and management
The group’s initiatives aim to obtain market leadership and generate value to shareholders. To retain market leadership, expand operations and improve the group’s financial performance, Oi strives to make the most of its main competitive advantage – that of being the country’s first integrated telecom company and the telecom service leader provider in Region I. The general strategy includes:
• Focus on convergence: In addition to synergies, which reduce operating costs and investments, our convergence strategy allows us to increase our sales through a cross-selling approach, representing an anticipated increase in revenues and a decrease in our client acquisition costs. The offering of integrated packages also contributes to greater client loyalty and, consequently, lower churn rates.
• Increased offering of broadband services: As it is both a tool to leverage our growth and an essential element in our offering of integrated services, broadband is one of the focal points in our strategy. We intend to continue expanding coverage and availability to our ADSL network, along with additional investments to improve our network to expand our offerings of broadband speed and evolution to new technologies (VDSL).
• Act as a consolidation agent: In a scenario of consolidation, we have been evaluating opportunities to participate as consolidation leader among the Brazilian telecommunications services providers. Any mergers, acquisitions or other joint efforts made by the company aim at increasing our market share, expand our product portfolio and obtain access to new markets.
• Increase the growth opportunities of our mobile business maintaining profitability: We intend to keep the strategy of focusing on profitability, through differentiated offers and the entrance to new markets (Region III – SP). We will also continue to benefit from the advantages offered by our payment platform via mobile network (Paggo).
• Increasing efficiency and control of costs: Initiatives to improve our internal processes, consequently optimizing our costs and quality, will continue to be part of our strategy to improve our operating efficiency and cost reduction through additional economies of scale.
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net revenue (R$ billion)
15.8
04
16.7
05
16.9
06
17.6
07
6.2
99
8.1
00
10.1
01
11.9
02
14.0
03
5.2
98
13.9
9M08
(’000) 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 9M08
Fixed 7,804 9,723 11,819 14,816 15,075 15,147 15,216 14,858 14,388 14,222 13,906
Mobile – – – – 1,401 3,893 6,863 10,343 13,078 15,984 21,867
% Pre-paid – – – – – – 86% 82% 82% 84% 84%
Broadband – – – – 50 217 496 805 1,128 1,518 1,918
• ADSL – – – – 50 217 496 805 1,128 1,518 1,866
• Cable – – – – – – – – – – 52
Video – – – – – – – – – – 60
RGUs* 7,804 9,723 11,819 14,816 16,526 19,257 22,575 26,006 28,594 31,724 37,751
Operational Indicators
* Revenue Generating Unit
OI in Numbers4
8
1.7
98
2.7
99
4.0
00
3.6
01
5.4
02 04
6.6
4.6
9M08
CONSOLIDATED EBITDA
6.8
05
6.1
06
6.5
07
6.2
03
32.7%
43.9%
49.6%
35.2%
45.1%44.1%
36.2% 37.0%41.2% 40.4%32.9%
EBITDA (R$ billion) EBITDA margin
Consolidated Revenue Breakdown
Subscription Local LD Network Data Other Mobile Traffic Traffic Usage
1998 20.3% 25.6% 15.4% 11.5% 0.7% 26.5% 0%
2002 28.6% 32.9% 12.9% 9.3% 5.6% 7.7% 3.0%
2007 27.8% 18.6% 14.3% 2.4% 11.4% 7.9% 17.6%
9M08 25.7% 15.8% 14.5% 2.6% 12.4% 6.3% 22.7%
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13.3
9M08
14.0
04
15.8
05
14.4
06
16.2
07
8.6
99
9.0
01
6.8
02
12.3
03
2.6
98
2.5
98 Total
34.0
0.8
04
1.1
05
1.3
06
2.4
07
0.1
99
0.7
00
0.1
01-0.402
0.2
03
0.2
98
1.0
9M08
net / LOSS INCOME (R$ billion)
capex (R$ billion)
2.1
04
2.4
05
2.3
06
2.2
99
2.8
00
10.1
01
2.0
02
1.7
03 9M08
3.62.3
07
TNE - MARKET CAP (R$ billion)
9.9
00
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OI, THE MARKET AND BEST PRACTICES
By-laws – Dividends
TNE According to article 37 of the Company’s By-Laws, the Board of Directors will submit to the Ordinary General Meeting a proposal regarding the uses of the year’s net income, complying with current legislation.
Net income will be used for:
I – A 5% (five percent) will be transferred to legal reserve until it reaches 20% (twenty percent) of paid-in corporate capital;
II – A 25% (twenty five percent) of adjusted net income, as stated in subsection I, a) and b) of article 202 of Law No. 6404/76, will be by law allocated as minimum mandatory dividends for all stockholders.
The amount corresponding to the minimum mandatory dividend will be distributed first, to preferred shareholders up to the preferred limit; second, to common stock shareholders, up to the limit; and thirdly, if there is any remaining balance, it will be prorated on an equal basis amongst all classes of shares.
Preferred stock shares have no voting rights, except in case of holders referred to in the single paragraph of article 11 of Company’s By-Laws, that states that they are secured and have priority for capital reimbursements, with no premium, and upon the payment of minimum non-cumulative dividends, corresponding to the greater of: (a) the 6% (six percent) per year of the amount resulting from dividing subscribed capital by the Company’s total amount of shares; or (b) 3% (three per cent) of the net equity share stock value.
Dividends not claimed within 3 (three) years will revert to the Company.
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Corporate Governance
Spreading the Corporate Governance culture across Oi has been the main focus of the Corporate Governance team. Workshops have been conducted and Corporate Governance Committees were structured with the objective of disseminating such concepts. In keeping the goal of being part of the Bovespa’s Sustainability Index, effortshave been made towards identifying actions (in all areas, such as general, social, environmental, financial, products, as well as corporate governance) that allow usto meet all requirements needed to be recognized by the market asSocially Responsible Company. In addition to the activities developed in 2007, it is worth mentioning that there is a project to consolidate the Competence Matrix and relationship processes with shareholders and the market. The process of coordinating shareholder-related demands establishes the standards of the Ordinary and Extraordinary General Meeting, material facts releases, the organization of shareholders’ documents, the elaboration of the Corporate Act and analysis are overviewed by the Executive Committee and the remaining Committees at Oi.
All steps related to the relationship with the Market, Securities and Exchange Regulators and Union structures, tracking of CVM (the Brazilian Securities and Exchange Commission) filings, are registered until said processes are concluded.
Internal Controls and Risk Management – In observing the Sarbanes-Oxley Law,during 2007 we assessed risks and controls of 48 relevant processes. In meetingthese demands, the Company benefited by strengthening its internal controlstructure, solidifying risk management fundamentals and better CorporateGovernance practices aimed at improving market perception.
Rules Governing the Disclosure of Information – A specific area governing the disclosure of information was structured with the goal of identifying the processes that must be automated and also of centralizing the systems access management to ensuredependability, availability and integrity of information, following Oi’s guidelines.
Ethics Code – Oi’s new Ethics Code was enacted on September 26, 2007 and stems from work that started in April, after the Ethics Committee and a group formed by many areas within the organization joined forces.
Disclosure Committee – Responsible for approving and disclosing information,the actions of the Disclosure Committee are based on the bestCorporate Governance practices.
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Statutory Audit Committee and Complaints Channel – The main responsibilities held by the Statutory Audit Committee are to monitor the activities of the Directors, to examine the Financial Statements and to inform its conclusions to the shareholders in quarterly meetings, or more often, if necessary. Following the demands of the Sarbanes-Oxley Law, the scope of this work increased and the Statutory Audit Committee became also responsible for guaranteeing adequate procedures related to the disclosure of information, following upon the assessment of efficient internal controls related to the financial reports, establishing procedures to receive, maintain and move ahead with complaints relative to accounting, internal accounting controls or audit-related issues, and receiving adequate resources to pay the Compensation of consultants and administrative expenses. It also evaluates the pace and conclusion of the work related to the Sarbanes-Oxley certification, helping to improve internal controls.
Social Responsibility
Fully aware of the significance of corporate responsibility, the Company established the Telemar Institute, now known as Oi Futuro. In charge of the group’s social and cultural activities, Oi Futuro believes that applying hi-tech to education and culture will make the access to knowledge in this country more democratic. Oi Futuro’s challengeis to promote a better future for the country’s children and adolescents, reducing geographical and social distances and developing citizenship among the young, through the exchange of know-how and appreciation of the country’s cultural diversity.
Oi Futuro seeks to collaborate in the social transformation of Brazil and believes that education and culture are the best ways of achieving this.
For more information, visit www.oifuturo.org.br.
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Shares TNE Capital Treasury Controlling Free-Float Shares
Common 130.611.732 3.070.731 68.504.187 59.036.814
Preferred 261.223.463 6.475.663 0 254.747.800
TOTAL 391.835.195 9.546.394 68.504.187 313.784.614
Shareholding Structure
At the end of September 2008, the subscribed and paid-in share capital ofTele Norte Leste Participações S.A. amounts to R$5,448,730,783.63, representedby 391,835,195 nominative shares without par value, as shown in the table below:
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The 133.1 million ADRs, which represented 52% of preferred shares at the end of the third quarter, were among the most liquid ADRs on the New York Stock Exchange. TNE’s ADRs were the seventh most liquid shares traded among the Brazilian companies as well as the fourth largest among the Latin American telecom companies.
Relevant Information
According to CVM Instruction n° 358, article12, shareholders owning a direct or indirect controlling stake in the company, shareholders who elect the members of the Board of Directors or the Fiscal Council, or any private individual, legal entity or group, acting jointly or representing a common interest, that attains a direct or indirect stake equivalent to 5% (five percent) or more of the company’s types or class of shares, must immediately inform the Company, under the terms of this article.
Oi guides its shareholders to comply with the terms of article 12 of CVM Instruction 358, however it cannot be held responsible for the disclosure of informationon acquisition or sale, by third parties, of participation that corresponds to 5% or more of a type or class of shares that represent its capital or that is entitled to rights over these shares and further securities issued.
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Luiz Eduardo Falco Pires Corrêa (CEO)
José Luís Magalhães Salazar (CFO& IRO)
Paulo Altmayer Gonçalves (Officer)
Julio César Pinto (Officer)
Tele Norte Leste Participações - TNL
Alternate Members
José Augusto da Gama Figueira
Carlos Francisco Ribeiro Jereissati
Roberto Schneider
Lúcio Otávio Ferreira
Joaquim Dias de Castro
Carlos Jereissati
João José de Araújo Pereira Pavel
Rodrigo Werneck Gutierrez
Paulo Roberto Teixeira (*)
TNE Board of Directors, Fiscal Committee and Executive Officers 9
Regular Members
José Mauro Mettrau Carneiro da Cunha (President)
Alexandre Jereissati Legey
Pedro Jereissati
Otávio Marques de Azevedo
Caio Marcelo de Medeiros Melo
Fernando Magalhães Portella
Álvaro Furtado de Andrade
João Pedro Amado Andrade
Armando Galhardo Nunes Guerra Junior (*)
Board of Directors
Regular Members
Sergio Bernstein (President)
Allan Kardec de Melo Ferreira
Fernando Linhares Filho
Pedro Julio Pinheiro
Ricardo Malavazi Martins
Fiscal Committee
Alternate Members
Sidnei Nunes
Dênis Kleber Gomide Leite
Aparecido Carlos Correia Galdino
Dílson de Lima Ferreira Júnior
Marcelo Andreetto Perillo
Executive Officers
(*) Licensed.
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Roberto Terziani
Carolina Gava Silveira
Bernardo Guttmann
Cristiana Ortigão
Patricia Frajhof
Lucia Domville 1 (646) 284-9416 [email protected]
Grayling Global
Rua Humberto de Campos, 425 / 7º andar – Leblon – Rio de Janeiro – RJE-mail: [email protected]
Visit our website: www.oi.com.br/ir.
We’ll be glad to help you
Get to know our Investor Relations Team10
BDO Trevisan Auditores Independentes
Auditors
Oi - Investor Relation Department
55 (21) 3131-1208
55 (21) 3131-1314
55 (21) 3131-1316
55 (21) 3131-1315
55 (21) 3131-2918
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