3. Agenda
04 Algar Group
10 Algar Telecom: overview and strategy
14 Business segmentation
35 Consolidated financial results
3
4. Algar Group
Brazilian company
Consolidated figures
Business areas:
R$ million 2009 9M10
IT/Telecom
Agribusiness Net revenue 2,709 1,936
Services
EBITDA 537 395
Tourism
Net Income 195 97
Operates in more than
Capex 203 161
1,000 towns and cities
Employees 17,000 19,657
61 offices throughout Brazil
More than 1.9 million clients
4
5. UniAlgar – Corporate University
Focus:
Entrepreneurial
Leadership UniAlgar in numbers
2010 COURSES ATENDEES
R$ 9.4 million
invested in 2010 On-site attendance 149 15,100
E-learning 115 41,500
12 years
in existence
5
6. Algar Institute
Focus: education of children
2010 main figures
Target: public schools Partner schools 100
Students 6,060
Students: elementary
Teachers 433
Founded: in 2002 Volunteers 478
States 4
Strategies
MG, SP, GO, MA
Partnerships with public schools
Investments in continuing education
for teachers and students
Long-term projects of pre-established duration
Alliances with NGOs specialized in education
6
7. Corporate Governance Structure
Auditing and Risk Management Shareholders’
Committee Meeting Family Council
Corporate Governance
Committee Fiscal Council
Strategy and Portfolio Board of
Committee
Directors Functional
Human Talents Hierarquical
Committee
Internal Auditing CEO External Auditing
COOs of Corporate VP Corporate VP Corporate VP Corporate VP
of Human Talents of Mkt. and of Strategic
Business areas of Finance
Sustainability Development
Deliberative body Executive body
7
8. Governance Timetable
“Formal Risk Management
2010 Implementation”
“IBGC Corporate Governance Award” (non-
2009 listed)
Shareholders Agreement
2008 revised
ion
Board of Directors
2005
lut
Committees
vo
tE
“Garcia Family
2001
en
Family Council
an
Constitution”
rm
Pe
Board of Directors
1999 (FDC support)
Professional Board
1995 Advisory Board Composed of friends
1991 Shareholders Agreement
Professional executive
1989 management
Professional CEO
External auditing (Big 5)
1988 and Internal auditing
8
9. Agenda
04 Algar Group
10 Algar Telecom: overview and strategy
14 Business segmentation
35 Consolidated financial results
9
10. Current ownership structure
Algar S.A. Minority
Shareholders
90,21% 9,79%
Algar Operational holding
Fixed telephony, broadband
Telecom
and data products
84,43% 72,48% 100% 84,27% 100% 99,97%
CTBC Multimídia Algar Algar
Celular Data Net Image Tecnologia Engeset
Mídia
Mobile telephony Data products Pay TV BPO, IT and Network Telephone
Internet provider Consulting maintenance directories
10
11. Overview
Integrated telecommunications company
Fixed-line and mobile telephony, broadband internet, data, pay TV, BPO,
IT services and consulting, network maintenance and telephone directo-
ries.
More than
1.8 million clients
11,500 km Consolidated figures
of optical fiber network
R$ million 2009 9M10
Net revenue 1,387 1,110
EBITDA 392 317
% 28 29
Employees 11,368 13,137
11
12. Strategic guidelines
Client-centered company • Make a difference in the client company relationship
• Select geographic expansion
Revenue diversification • New services
Profitability • Increase EBITDA margin
• Implement IP technology creating
IP Technology a new range of services
• Optimize debt service resulting in funds available for
Availability of funds growth
Human resources • Permanent focus on human resources development
12
13. Agenda
04 Algar Group
10 Algar Telecom: overview and strategy
14 Business segmentation
35 Consolidated financial results
13
16. Market positioning
To be the most effective telecom company
in customer relations
Long distance calls: ranked 1st for 11 months
Fixed-line local calls: ranked 1st for 9 consecu-
tive months
Performance Index
in customer
Mobile calls: ranked 2nd for 7 months and attendance– IDA
(ANATEL)
ranked 1st for 2 months
1st 2nd
From nov09 to oct10
16
17. Areas
Concession
Started in 1954
87 communities in 4 different states (MG/SP/GO/MS)
1.5% of national GDP and GDP per capita 35% above the national average
2.9 million inhabitants
Expansion
The company has authorization
to provide telecom services
across the country and selected
primarily the attractive regions
around its backbone
High growth potential - region
concentrates 50% of the GDP
and 60% of Brazilian telecom
traffic
17
19. Major guidelines for growth
B2C B2B
Focus on convergence Focus on offering customized solutions to medium
and small companies
Increase broadband services
Complete provider of IT/telecom solutions
Seek entertainment and communication solutions
Be an alternative to the incumbents
Expand data business around backbone
19
21. Fixed-line clients
Growth driven by the corporate market in the expansion area
Recent customer increases in the concession area are a result of bundle offers
Fixed lines
(thousands)
CAGR: 3,2% +13,2%
772
701 682
658 684
631 611 622
599
587
151
27 73 102 95
2007 2008 2009 Sept09 Sept10
Expansion Concession
21
22. Mobile clients
Strategic focus on post paid clients and on business profitability
9M10 X 9M09:
22% increase in post paid clients and 9% in pre paid
33% of clients are post paid (the industry average is 19%)
ARPU of R$ 42.5 –highest among all Brazilian telecoms
Mobile clients
(thousands)
+13,3%
:19,0% 556
CAGR
511 491
447
361 67%
234 309 350 342 374
33%
127 138 161 149 182
2007 2008 2009 Sept09 Sept10
Post-paid Pre-paid
22
23. Broadband clients
Important component of bundles
Highest ADSL penetration among Brazilian incumbents
3G is becoming a complementary product of ADSL
Broadband
(thousands)
+16,3%
267
3,0%
CAGR: 1
234 230
220 ADSL Penetration
(% of fixed lines in service)
183
228
213
183 203 204 31%
29% 30% 30%
28%
26 39
7 31
2007 2008 2009 Sept09 Sept10 2007 2008 2009 Sept09 Sept10
3G ADSL
23
24. Pay TV
Pay TV via DTH launched in May 2010
Service provided in the concession area of the company
Pay TV 67
(thousands)
33
32 31 32 32
34
2007 2008 2009 Sept09 Sept10
DTH Cable
24
25. Recent awards
2010 Best and Biggest
Exame Magazine500 biggest in sales and telecom
The 70 best IT and Telecom companies to work for - 2010
COMPUTERWORLD Great Place to Work Institute
Best companies to work for – 2010
Great Place to Work Institute Época Magazine
2009 Modern Consumer Award
Customer service excellence
25
27. Algar Tecnologia
The ideal partner to design tailor-made solutions for your company.
ITO, BPO, Contact Center and Consulting Solutions
12 years of expertise
9M10 net revenue of approximately R$240 million
Over 10,000 associates (employees)
7,000 workstations for contact center and BPO operations
3 Data Centers, with over 13,000 sq.feet. (Tier 3; ISO 20.000/27.000)
3 software houses with CMMI and MPS BR certifications
2,000 servers in operation
More than 200 clients in Brazil and in the U.S
Operational and commercial presence in Brazil
Belo Horizonte (MG), Brasília (DF), Campinas (SP), Rio de Janeiro (RJ), São Paulo (SP), Uberaba (MG) and Uberlândia (MG).
*Sales in all Brazil
27
28. Algar Tecnologia
Solution Portfolio
BPO Industries BPO Business Process BPO Customer Services
Agribusiness Government Contact Center
Construction Sanitation Risk Management
Education Health Inbound and outbound sales
Energy Health Customer Experience Management
Financial Management Back-office
Media and Telecom
entertainment Service Desk
IT Telecom Consulting
Customer Services
IT Infraestructure Services
Data
Information Technology
Application Services
Voice
Special Projects
Managed Services
28
34. Agenda
04 Algar Group
10 Algar Telecom: overview and strategy
14 Business segmentation
35 Consolidated financial results
34
35. Consolidated Revenue
Gross revenue Net revenue R$ million
1,431
1,337
+ 9,0%
502 1,387
519 + 8,2%
Fixed Voice 1,273
Mobile Voice 1,110
219 1,149 1,026
193 Broad band
150 Data
135
267 Pay TV
234
18 19 BPO/IT/Consulting
186 224
Other
53 50
9M09 9M10 2007 2008 2009 9M09 9M10
Data, broadband, pay tv and BPO/IT are the main growth drivers, substituting
traditional revenue
Data and broadband already represent 29% of total revenue (9M10)
35
36. EBITDA and Margin
Consolidated R$ million
EBITDA margin
28% 28% 29%
28% 28%
327 358 392 291 317
2007 2008 2009 9M09 9M10
Telecom BPO/IT and Other
32% 32% Consulting business
261 277 13% 14% 8%
3%
26 31 2 7
9M09 9M10 9M09 9M10 9M09 9M10
36
37. Consolidated Net Income
R$ million
Net income margin
7%
5%
5%
4%
59 68 77
2%
44
26
2007 2008 2009 9M09 9M10
9M09 vs 9M10: Strong growth of net income due to:
better operational results
better financial results
37
38. Consolidated Capex
Capex R$ million
299
174
160
132
92
2007 2008 2009 9M09 9M10
Consolidated capex in 9M10 directed to:
21% - Data and broadband
12% - NGN program
10% - Pay-tv via DTH
9% - BPO/IT
8% - Voice
38
39. Consolidated Debt
R$ million
Net Debt
594
503 508
478 463
Dez/07 Dez/08 Dez/09 Jun/10 set/10
39
40. Consolidated Debt
R$ million
Gross debt amortization Main Creditors
In 1 year 170 Development banks 146
From 1 to 2 years 140
Domestic banks 266
From 2 to 3 yearst 130 Bonds
Capital Market 257
From 3 to 4 years 123
Vendors 10
Over 4 years 116
Ratings
“A+(brA)” stable (from Fitch ratings)
“brA+” stable (from Standard and Poors)
40
41. Strong points
Full service provider
Operational efficiency
Growth potential
Corporate governance Customer relationship
Financial solidity
41
42. Disclaimer
Statements in this presentation, as well as oral statements made by
the management of Algar Telecom (the “Company”), that are not
historical fact constitute “forward looking statements” that involve
factors that could cause the actual results of the Company to differ
materially from historical results or from any results expressed or
implied by such forward looking statements. The Company cautions
users of this presentation not to place undue reliance on forward
looking statements, which may be based on assumptions and
anticipated events that do not materialize.
42
43. Investor Relations
Rua José Alves Garcia, 415
Bairro: Brasil
38. 400 – 668/ Uberlândia – MG/ Brazil
Phone: (5534) 3256 – 2978
Email: ri@algartelecom.com.br
Visit our Website
ctbc.investor-relations.com.br
43
