presentation 3q10

Results3Q103Q10

AgendaAgenda

Operating Performance

Financial PerformanceFinancial Performance

A quarter highlighted by sustained revenue th ith i d fit bilitgrowth with increased profitability.

Vivo’s competitive advantage generates high customer base growth, mainly in the postpaid

t

Growth in postpaid higher than the average of total customer basesegment...

...resulting in ARPU i t d i b D t

customer base

ARPU increasing by the second improvement, driven by Data

Revenues...

which combined to a better mix

the second consecutive quarter

2 82 8...which combined to a better mix of additions and efficiency in acquiring customers increases the profitability per client...

21% SAC reduction in relation to the previous year

2.52.82.8

SAC/ARPU (months)p y p

...thus sustaining a high level of revenue growth with substantial increase in

10% growth in Net Service Revenue with

i

SAC/ARPU (months)

substantial increase in profitability.

33.4% Margin.

3

Vivo’s competitive advantage generates high customer base growth mainly in the postpaid

Increase in 3G Promotions designed Largest own The right handset

customer base growth, mainly in the postpaid segment...

Coverage for each segment stores chain portfolioConcept stores with customized services for high-end customers

6.4% 30.3%

QoQ YoY

48.956.0 57.7

+3.1%+18.2%

2.3% 15.3%

Postpaid Blended

4

Prepaid Postpaid

...thus keeping a customer base even more ti i l i t i ll

Customers VOICE TRAFFICMOU

active, mainly in outgoing calls...

RechargingVOICE TRAFFICMOU

+ 29.2%+53.1%

Million of minutes % of prepaid customer base

Minutes

4 2% 10 7%

QoQ YoY

24 25 89

114 115

+ 0.9%

QoQ YoY 18,744 19,600

+4.6%

+ 4.9 p.p.

4.2% -10.7%

0.0% 47.5%90 90

28

24 25 896.0% 5.2%

4 2% 74 8%

12,800

61

3Q09 2Q10 3Q10

4.2% 74.8%

Outgoing Incoming Outgoing Incoming Sep-09 Sep/10

5

...resulting in ARPU improvement, specially in th t i ARPUthe outgoing ARPU...

ARPU – R$

- 7.4%

Outgoing ARPU Evolution

27.225.0 25.2

+ 0.8%

7.4%

QoQ YoY

11.0 9.4 9.3

25.0 25.2

-1.1% -15.5%

Q Q

16.2 15.6 15.9 1.9% -1.9%

3Q09 2Q10 3Q10Outgoing Incoming

6

...driven by the high adoption and profitability of data services...

Growth of 3G Plans Data + VAS ARPU – R$Growth of 3G Plans

Customer Base

+112% 13%

19%

Data ARPU/Total ARPU

7

...which combined with a better mix of additions d ffi i i i i li t i and efficiency in acquiring new clients increases

the profitability per customer...

- 20.5%

SAC Blended* - R$

QoQ YoY 8

7871

- 12.7%

Payback – SAC/ARPUQoQ YoY

17

17 19 16

9 9

7

8 9

7 62

-15.8% -7.0%

-19.8% -22.1%

-17.6% -11.3%

-2.5% -50.8%26

13 13

21 18

3T09 2T10 3T10

-14.1% 5.6%

Subsidy

Comissions

Advertising

Lending

Fistel

* (70% of marketing expenses + costs of distribution channels + handset subsidy + corporate lending +Fistel)/gross additions.

8

...thus keeping a high level of revenue growth ith i d fit bilit lti i with increased profitability resulting in

EBITDA and Profit growth...

R$ million 3Q10 3Q09* Δ %

Net Service Revenue 4,307.6 3,913.3 10.1%

EBITDA 1,537.8 1,396.4 10.1%

EBITDA Margin 33.4% 33.4% 0.0 p.p.

Net Result 601.8 332.7 80.9%

Cash Flow after investments 979.4 245.3 299.3%

* The 3Q09 numbers were reclassified when applicable, according to the adoption of new accounting practices in Brazil (CPCs).

9

...and strengthening the basis for a sustainable long term growthlong term growth.

Gaining know-how and innovating in products and services…

...and universalizing the 3G coverageg p

Co-Branded Card Vivo Itaúcard

FINANCIAL SERVICES

the 3G coverage

Mobile Checking Account Bradesco Santander Broker

Mobile Payments with Mobile Payments with MasterCard, Itaú and RedeCard

VIVO’S SERVICE STOREVIVO S SERVICE STORE

MOBILE LEARNING

Language courses through the mobile

10

through the mobile phone

AgendaAgenda

Operating Performance

Financial PerformanceFinancial Performance

Net Service Revenue YoY Growth

%

R$ million

+ 10 1%+ 10.1%

+ 4.3%

4,1304,308

1 537

522 802 843 3,913

3Q 10/09 GrowthR$ million

1 806

1,532 1,490 1,537

1,783 1,806 1,889

3Q09 2Q10 3Q10

+61.4%

Outgoing Voice

Interconnection

Data + VAS

In order to simplify the analysis the chart does not include ‘Other Revenues’

+0.4%+5.9%

In order to simplify the analysis the chart does not include Other Revenues .

12

Data Revenue + VAS

+ 61.4%

R$ million

+5.1%

19.4% 19.6%

QoQ YoY

3.7% 10.5%OthersOthers 12%

802843

97 100 13.3%

7.6% 92.3%Vivo InternetVivo

Internet 54%

SMS+MMS 34%

522

238

425 457 91

1.7% 47.4%SMS + MMS

...and currently represents the largest proportion

of data revenue

194 281 286

238

3Q09 2Q10 3Q10

The Internet Revenue grew above 90%

of data revenue.3Q09 2Q10 3Q10% Net Service Revenue

gfor the 4th consecutive quarter

13

Operating Expenses*R$ million

Service Rendered Goods Sold Selling Expenses+ 15%

925 1,038 1,064

+ 3% - 5%

+ 10%

847 954 896

+ 6%

- 6%

925 ,452 394 431 847 954 896

Fistel, Fust, FuntelH. R.General and Administrative

10%+ 15%

+ 6%

266 281

+ 37%

+ 6%

264

+ 10%

- 2%

154 167 177 206266 281 240 269 264

* Excluding Depreciation.

14

EBITDA EvolutionR$ million

+61.4% +3.1% +36.8% +14.0% -4.5% +23.7%+5.7%

1,396

321113 (76) (163)

20 (48) (26) 1,538

+10.1%

3Q09 Data + VAS

Voice + others

H. R. Service Rendered

Goods Sold

Selling Expenses

Others 3Q10

Revenues CRevenues Costs

15

EBITDA and MargingR$ million

QoQ YoY

14.5% 10.1%

Financial discipline maintain expenses growth under control

EBITDA EBITDA Margin

• 3Q09 was benefited by non Q yrecurrent effects in the amount of R$78 million

16

EBIT and Financial Result

EBIT

R$ million

FINANCIAL RESULT

3Q09 2Q10 3Q10

982

EBIT FINANCIAL RESULT

+ 62.3%

(98) (101)

(64)

605

982

503

3Q09 2Q10 3Q10

17

Net Result and Cash FlowR$ million

Net Result Cash Flow+ 81% + 81%

+ 155%

fi l i

141602

(142)35235

Profit Evolution

333+81%

18

Gross and Net DebtR$ million

- 17.1% - 43.2%

Gross Debt Net Debt

5 167 3

- 6.6%

4 245 1

-28.1%

68%78% 81%

5,167.34,588.4 4,284.5

4,245.13,355.3

2,411.8

32% 22% 19%

3Q09 2Q10 3Q10 3Q09 2Q10 3Q10

Credit Rating: ‘brAAA’

Short Term Long Term

19

CAPEXR$ million

13.0% 11.1%14.7%

675.2

90.1 108.7

117.4 489.2541.5

467.7

105.3 119.7

105.1

327.5 264.4

3Q09 2Q10 3Q10

Network Technology

% Capex/Net Revenue

Others

3Q09 2Q10 3Q10

20

Investors and Shareholders

CustomersShareholders

VIVO VALUESVIVO VALUES

Trust

Enthusiasm

Interaction

Employees and

Interaction

Quality

Simplicity

SustainabilityEmployees and Partners

Sustainability

B i

21

Businesses