2. GSM: Strong focus on coverage
Coverage in double
Network Expansion Cities Covered
813 255 256 256
806 813
804
598 786
488
186
2Q03 2Q04
3Q03 4Q03 1Q04 2Q04
TDMA GSM
BTS RBS 82 % of the population
GSM = TDMA in less than one year
Slide 2
3. GSM: Network Deployment
Fast network deployment due to high percentage site sharing
CAPEX Network Deployment
R$ million
786 sites
111.5
69.5
97% of site sharing
42.0
1Q04 2Q04 1H04 Deployment period: 10 months
Significant CAPEX optimization
Slide 3
4. Innovation: a key differentiator in the market
GSM: the winning technology State of the art on innovation
Fast Coverage
Fast Coverage GPRS data
facilities
throughout
network
Network already
integrated
EDGE already
Plug & Play implemented in
Entire service
area
Slide 4
5. GSM Handset Portfolio
LOW (entry price < R$399) MED (> R$400, <= R$999) HIGH ( >R$999)
10 models: 13 models: 15 models:
100% graphic display, high 100% with color, GPRS and 100% with Hands Free,
resolution and SMS WAP polyphonic ring tones, MMS
69% with Hands Free, and camera
polyphonic ring tones and MMS 20% with Video Play Back
15% with Camera 6% with EDGE technology
TIM Connect via CSD More than 38 handset models in our Portfolio
TIM Connect Fast GPRS/EDGE Photo
VAS Services
Phones
TIM WAP via CSD
TIM WAP Fast GPRS/EDGE Video Phones
TIM Kit Fast /TIM Click
TIM Foto Mensagem
TIM Vídeo Mensagem
TIM Box VIP
Slide 5
7. Record net additions
GSM Lines representing 22.2% of total base
Net Additions (000’s) Lines (000’s)
+34% 2,417.8
1,811.7 20%
+284% 29%
225.7 80%
71%
58.7
2Q03 2Q04 2Q03 2Q04
Prepaid Postpaid
Slide 7
8. VAS: Increasing share of ARPU
ARPU
R$
39.4 37.9 40.7 41.4 38.2
5.0% 6.2%
4.3%
7.3%
2Q03 3Q03 4Q03 1Q04 2Q04
Introduction of Bill & Keep
% of VAS
Slide 8
9. Continuing growth in VAS
SMS Volume VAS Revenues
Millions
5.5%
4.5%
3.3% 3.6%
2.7%
79.4 19.3
15.5
64.6 9.2 11.7
7.3
40.7 44.5
29.4
2Q03 3Q03 4Q03 1Q04 2Q04
2Q03 3Q03 4Q03 1Q04 2Q04 VAS Revenues (R$ Million)
% over Gross Services Revenues
Innovative services launched in the 2Q04:
“TIM Kit Fast”
“TIM Edge”
“TIM Box ” and “TIM Box VIP”
Slide 9
10. Revenue growth
Gross Revenue
R$ Millions
+39% 462.3 2Q04 YoY
333.7 24% Handsets Revenue (R$ millions) 111.7 + 85.9%
Handset Sold (thousands) 390.9 + 128.2%
18% Average handset prices (R$) 285.8 - 81.5%
76% 2Q04 YoY
82% Services Revenue (R$ millions) 350.7 + 28.1%
Lines (thousands) 2,417.8 +33.5%
Average increase of tariffs 8.1% + 8.1%
2Q03 2Q04 VAS (R$ millions) 19.3 +165.5%
Sales of Handsets
Services Revenue
Slide 10
11. EBITDA performance
EBITDA
87.7 85.4 Weight on Ebitda Mg YoY*
2Q04 YoY
Commercial Expenses 69.8 + 4.7p.p
41.1% Handset Costs 107.5 + 9.8p.p
32.2% Cost of Services 47.3 - 5.4p.p
G&A Expenses 22.7 - 0.1p.p
2Q03 2Q04
EBITDA (R$ Millions)
EBITDA % Over Net Service Revenues
* Calculated as YoY of the weight on total net revenues.
Slide 11
12. Cash flow
R$ Millions Cash In Cash Out
14
124 112
45
51 43 22
419 385
Begin Net Deprec. Others CAPEX Working Dividends Loans Final Cash
Cash Income Capital 2Q04
Jan/04
Slide 12
13. Low debt, high liquidity
Total Debt Net Cash
R$ Millions R$ Millions
+44%
305 -80% 331
231
62
2Q03 2Q04
2Q03 2Q04
Slide 13