Investor Relations – Rio de Janeiro, October 29th 2010

1

Agenda

Q3 Results

Economics

Q4 Outlook

2

Q3 in few: a sustainable growth

Size

Growth

Profitability

• Market Share

• Incremental Market Share

Customer Base 46.9 Mln +18.5%

EBITDA

24.5%

40%

• Net Service Revenues

• EBITDA Margin

• EBIT

• EBIT Margin

• Operating FCF

• OFCF Yield

3,648 +6.1%

924 +19.6%

25.3 +290 bps

257 +226%

7.0% +470 bps

603 +53.9%

16.5% +510 bps

Q3 YoY

Ability to combine

Customer Base growth

with higher profitability

Net Revenues

3,387 +6.3%

3

Q1'10 Q2'10 Q3'10

25.3%25.1%24.8%

...with higher Profitability”

% YoY EBITDA +31.0% +16.1% +19.6% +21.6%Δ EBITDA Margin (bps) +528 +320 +287

“Talking More”

% YoY Total Rev. +3.0% + 1.3% +6.1% +3.5% % YoY Service +5.4% + 6.4% +6.3% +6.0%

3,2693,531 3,648

MOU +42% + 51% +37%

100110

12324.5%24.0%

23.6%

Consistency in Results

Q1'10 Q2'10 Q3'10

42.4

∆ % +17% + 17% +19%

YoY growth

44.4 46.9

Q1'10 Q2'10 Q3'10

3,146

YoY growth

3,317 3,387

YTD YoY

BR GAAP, R$ Mln

YTD

Market Share

CustomerBase

Q1'10 Q2'10 Q3'10

4,149

YoY growth

4,769

MOU

Total traffic

Traffic +64% + 77% +61%

Mln minutes, monthly averageCustomer base, Mln lines

Net Total Revenues

Net Service Revenues

BR GAAP, R$ Mln

810887 924

EBITDA

EBITDAMargin

“More People”

“Generating more Revenues ...

5,614

IFRS: 28.2%*

IFRS: 1,038*

* IFRS figure according to controlling shr. Report (TIM Brazil consolidated)

4

24.5%24.0%

23.6%

39.7 37.5 35.8

7.26.96.6

“More People”

Market Share and Client Base

Customer Base, Mln lines

46.942.4 44.4Post

Pre

Market Share

Q1’10 Q2’10 Q3’10

YoY growth %

CB +17% +17% +19%

Post +7% +12% +15%

Pre +19% +19% +19%

Back to #1 in NE

TIM #2

Back to #2 in SP

34%

24%17%

Solid #1 in the South

TIM #1

P1P2P3

P1

P2

P3

1.1 1.7 2.2

0.30.3

0.15

Incremental Market Share and Net Adds

Net Adds, Mln lines

2.5

1.25

2.0

Post

Pre

IncrementalMarket Share

Q1’10 Q2’10 Q3’10

#1

% of net share49%40%

29%

25

30

35

40

45

50

jul/10 aug/10 sep/10

40%34%

24%

Market share %, Metropolitan area

TIM back to #1

34%32%28%

6%P1

P2

P3

0

0

0

0

0

0

0

0

0

0

Q107 Q3'08 Q1'09 Q3'09 Q1'10Q1'08Q307 3Q092Q09 4Q09 1Q10 2Q10 3Q10

Back to #2 in Pre-Paid

Market share %, Area 10Market share %, PR / SC

Q3'10

43%

22%20%14%

0

Q1'09 Q2'09 Q3‘09 Q4’09 Q1‘10 Q2‘10 Q3‘10

25%

5

100%

100%

100%100%

100%

100%100%

99%100%

100%

98%

97%97%

91%

“Talking more”

Q1'10 Q2'10 Q3'10

Out

In

∆ % + 42% + 51% + 37%MoU 2009 70 73 90

YoY growth

Minutes / lines / month

Q1'10 Q2'10 Q3'10

59

∆ % - 25% - 25% - 31%SAC 2009 104 88 85

YoY growth

Q1'10 Q2'10 Q3'10

2.9% 2.7%2.0%

78

∆ % - 33% - 5% - 33%Bad Debt 2009 4.6% 3.1% 3.2%

YoY growth

BR GAAP, R$ BR GAAP, % Service revenues

MOU

2007 2008 2009 Q2'10

40%

#1 Mkt Share LD

SAC Bad Debt

100 110123

Sales Efficiency

Network Quality

P3P2P1

Drop calls

Network Quality

0.600.620.620.660.710.750.790.850.85

1.051.061.061.041.2

aug.09 oct.09 dec.09 feb.10 apr.10 jun.10 aug.10

* SAC = Subsidy + Commissions + AdvertIsing & Promotions

66

3.2x2.8x 2.5xSAC/ARPU

SAC

• 3Q’10: R$ 69,4 Mln• 3Q’09: R$ 102,9 Mln

6

“Generating More Revenues”... (1/2)

Q1'10 Q2'10 Q3'10

3,269

∆ % +3.0% + 1.3% +6.1% + 3.5%2009 3,174 3,486 3,440 10,099

YoY growth

BR GAAP, R$ Mln

3,531 3,648

YTD

Q1'10 Q2'10 Q3'10

3,146

∆ % +5.4% + 6.4% +6.3% + 6.0%2009 2,985 3,118 3,186 9,289

YoY growth

BR GAAP, R$ Mln

3,317 3,387

YTD

Q1'10 Q2'10 Q3'10

172

∆ % +14.4% + 26% +29% + 24%2009 151 165 170 485

YoY growth

BR GAAP, R$ Mln

208 220

YTD

Q1'10 Q2'10 Q3'10

124

∆ % - 34.4% - 42.1% +2.8% - 26%2009 189 368 254 811

YoY growth

BR GAAP, R$ Mln

213

261

YTD

Total Revenues Service Revenues

Intelig Service Revenues Product Revenues

Consistency

Invertedtrend

Acceleration

Take-up

7

... with “High Quality Mobile Revenues” (2/2)

Business Generated vs Received Service Revenues Growth

Gross Margin of Outgoing Voice* Outgoing Voice Contribution

31% 27%

58% 66%

11% 12%

Q3'09 Q3'10

VAS

Voice

Incoming

Generated

Received

14%

-7,2%

Business Generated

Business Received

IncomingRevenues

69%

63%

Q3'09 Q3'10

OutgoingVoice Net Revenues

Saving on ITX costs

Δ Out Voice Contribution

+20% vs. YA

* (Outgoing Voice Revenue – ITX cost) / Outgoing Voice Revenues

73%69%

% on Net Service Revenues % on Gross Service Revenues

Δ YoY

+ 14%

- 2%

+ 14%

Voice Out

VAS

Others

• Discount on services +17% YoY:– Chip Only approach (voice and

data)– Push Internet Penetration

. Pre: 1 month free

. Post: 6 months free

% YoY

+10 %

-7 %

+223 Mln

• Local: + 11%• LD: + 25%

8

Q1 '10 Q2 '10 Q3 '10

4.4%

6.1%7.0%

24.8% 25.1% 25.3%

Q1 '10 Q2 '10 Q3 '10

16,5%6,5%

214143

257887

810

924

“Higher Profitability”

EBITDA

Margin %

EBITDA

∆% +31% +16% +20% +22%EBITDA ‘09 618 764 772 2,155(2009 Pro-forma TIM + Intelig)

YTD

BR GAAP, R$ Mln

Operating FCF

OFCF Yield

OFCF Q1’10

Q2’10 Q3’10

EBIT

EBIT

∆% - +151% +226% +454%EBIT‘09 -54 85 79 111(2009 Pro-forma TIM + Intelig)

YTD

BR GAAP, R$ Mln

∆% +43% - 44% +54% -OFCF ‘09 (1,251) 407 392 (452)

BR GAAP, R$ Mln

YTD

+290 bps vs. 3Q09 Margin %

+470 bps vs. 3Q09

+510 bps vs. 3Q09

(716)

229

603N/A

vs. 116Mln YTD 2010

vs. 614Mln YTD 2010

vs. 2,620MlnYTD 2010

9

Q3 Results

Economics

Q4 Outlook

Agenda

10

1Q 2Q 3Q September YTD

mln R$ 2010 2009abs. YoY

% YoY 2010 2009abs. YoY

% YoY 2010 2009abs. YoY

% YoY 2010 2009abs. YoY

% YoY

Net Revenues 3,269    3,174    96        3.0% 3,531    3,486    45        1.3% 3,648    3,440    208     6.1% 10,448  10,099  349     3.5%

of which Services 3,146    2,985    161     5.4% 3,317    3,118    199     6.4% 3,387    3,186    201     6.3% 9,850    9,289    562     6.0%

of which Handsets 124       189       (65)      ‐34.5% 213       368       (155)    ‐42.1% 261       254       7          2.8% 598       811       (213)    ‐26.3%

EBITDA 810       618       191     30.9% 887       764       123     16.1% 924       772       152     19.6% 2,620    2,155    466     21.6%

Ebitda Margin % 24.8% 19.5% 25.1% 21.9% 25.3% 22.5% 25.1% 21.3%

Capex 576       201       375     186.7% 436       429       7          1.6% 463       541       (78)      ‐14.3% 1,475    1,171    304     26.0%

EBITDA ‐ Capex 234       418       (184)    ‐44.0% 450       335       116     34.6% 461       232       229     99.0% 1,145    984       161     16.4%

Br Gaap

Consistency in Quarterly Trend

Guidance on trackIFRS shows at OFCF level the benefit of reducing subsidy strategy

*: BRGAAP and IFRS 2009 figures Proforma including InteligNote: Key difference between BRGAAP and IFRS is the handsets subsides capitalization

1Q 2Q 3Q September YTD

mln R$ 2010 2009abs. YoY

% YoY 2010 2009abs. YoY

% YoY 2010 2009abs. YoY

% YoY 2010 2009abs. YoY

% YoY

Net Revenues 3,296    3,198    98        3.1% 3,559    3,512    47        1.3% 3,677    3,467    209     6.0% 10,532  10,178  354     3.5%

of which Services 3,177    3,015    161     5.3% 3,350    3,151    199     6.3% 3,418    3,223    196     6.1% 9,945    9,389    556     5.9%

of which Handsets 120       183       (63)      ‐34.6% 209       361       (152)    ‐42.2% 259       245       14        5.6% 587       789       (202)    ‐25.6%

EBITDA 949       706       243     34.4% 1,012    872       140     16.1% 1,038    882       156     17.7% 2,999    2,460    539     21.9%

Ebitda Margin % 28.8% 22.1% 28.4% 24.8% 28.2% 25.4% 28.5% 24.2%

Capex 689       322       368     114.4% 520       535       (15)      ‐2.7% 526       692       (166)    ‐24.0% 1,736    1,548    187     12.1%

EBITDA ‐ Capex 260       385       (125)    ‐32.5% 492       337       155     45.9% 512       190       322     169.5% 1,264    912       352     38.6%

IFRS as reported

by Telecom

Italia

For perspective

Current

*

*

11

EBITDA3Q10

Depreciation and

Amortization

EBIT Net Financial Expenses

Taxes and

Others

Net Income

3Q09 (693.6) 78.8 88.6 27.6772.3 194.9

151.7 26.4 (150.1) (98.2) (70.2)Y/Y 178.0

From EBITDA to Net Income (in R$ Mln)

124.7

924.0

256.8

-667.2

-61.4

-70.6

Consistent EBITDA growth

EBITDA Evolution (in R$ Mln)

EBITDA3Q09

Δ Business Generated +

Handsets

Δ Business Received

(incoming)Δ Network

Δ Commercial Expenses EBITDA

3Q10

Δ G&A + Other

expensesEBITDAMargin

25.3%+2.8 pp

22.5%

+20%

772

273 -65-65

-20 28

924

Net Services: +266Products: +7

Net Revenues: +208 Costs: +57

• Marketing & Sales• COGS• Bad debt

• ITX• Maintenance• Energy & Rental

• Personal• G&A• Other

Non recurrent impacts (Total: 234 Mln)• +R$164,5Mln - FX variation on Intelig’s 3Q09 results• +R$38,5Mln - TIM Celular’s reversion of tax provision• +R$30Mln - adherence of REFIS fiscal benefit

12

Free Cash Flow and Net Financial Position

Operational Free Cash Flow in 3Q10

924

-463

603

142

EBITDA Δ Workingcapital

CAPEX Oper.FCL. * TIM excluding Intelig

R$ 3.45 bln (of which 73% in the long term)

~22% of debt is denominated in foreign currency (100% hedged)

10.0% in the 3Q’10 vs. 9.74% in the 3Q’09 and 10.0% in the 2Q’10

Gross Debt

Average AnnualCost

161

2,0792,544

-603

2,520

Oper FCF Non-OperFCF

3Q09* 3Q102Q10

959 1,703 1,369

-18.3%

Net Financial Position – Sep10R$ Mln

% of Net revenues

YTD09 YTD10

11.4% 14.1%

3Q09 3Q10 3Q09 3Q10 3Q09 3Q10

2x 2x 10x

3G Towersactivated

2G Capacity(# TRX)

Microwaves activated

+20% YoY

+54% YoY

Cash% on Net Revenues

25.3% 3.9% 16.5%

13

Q3 Results

Economics

Q4 Outlook

Agenda

14

Q4 Outlook

CommunityExpansion

(Customer Base)

FMS on Voice(Usage)

Internet Penetration(Data)

Strategy

KPI’s 50 Mln at end of year

MOU 140’

~10Mln Unique

Active Users(20% of CB)

Expected Results

Maintain

- CB Expansion

- EBITDA and Margin Improvement

- Cash Generation

Accelerate

- Top line Growth

- Smartphone Penetration

- Data Revenues

- Intelig Development

15

Christmas Campaign

Infinity

Ultimate Smartphones

portfolio, unsubsidised, sold in a pro-

rata basis

Infinity Web

Smartphone PenetrationTiM Liberty

16

Intelig Development among Corporate Market

Service Revenues Growth

206 220

Net Revenues 2010 in R$ Mln

172

YoY growth

+29%+26%

+14%

Q1'10 Q2'10 Q3'10 Q4'10

Rio de Janeiro’s City Hall

352 links with potential up to 2,000 links

Sky

AES 54 links won

30 links won

São Paulo Government

~25 thousand mobile lines (total replacement)

Mobile

Fixed

Fixed

FixedBR GAAP

Last Auctions Won

17

Conclusions

Q3 confirms TIM Turnaround, with improvement on Network Quality, Market Share, Revenues Growth, Profitability and Cash

“Voice is Good”: outgoing voice continues to be the key driver of growth both in terms of Revenues and Contribution

In Q4 we will insist in marketing efforts to enlarge TIM Community, forcing FMS on voice and penetrate the internet market via smartphone