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Tim Presentation Goldman Sachs Conference Set09 Eng

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TIM RI

1) TIM Participações S.A. presented their re-launch plan and 2nd quarter results at a Goldman Sachs conference. Their re-launch plan focused on improving the brand, network quality, customer satisfaction, offerings, sales force, and efficiency. 2) In the second quarter, TIM showed an increase in net adds, market share recovery, and ARPU growth compared to the first quarter. Revenue growth was flat while EBITDA margin increased. 3) Going forward, TIM aims to build a solid growth platform for 2010 by continuing their re-launch initiatives and focusing on long-term structural profitability increases.

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TIM Participações S.A Goldman Sachs Communacopia XVIII Conference September 17th, 2009 0
TIM PARTICIPAÇÕES S.A. | Investor Relations Agenda Re-launch Plan: Key Actions and Results 2nd Quarter Results Build a Solid Platform for the Long Term Market Facts and Historical Data 1
TIM PARTICIPAÇÕES S.A. | Investor Relations Re-launch Plan: Key Actions Actions in Course Repositioning 1 Share of voice increase Brand New format to increase recall and brand linkage Coherence and brand recognition 7 2 Focus on 2G Service Quality : Network 2G: excellence on voice quality 3G: “right on spot” React to 2008’s 3 Selectivity and Multi-channeling inertia on revenues: Caring Services improvement: better flow over demand Caring model evolution: service level vs. client value - minimizing impact 4 Distinctiveness and Innovation on 2009… Offering Infinity pre and post Shock offering: “Recarga Imperdível” - …and preserving “Azul” (DDD = local) “TIM Único” profitability 5 “Back to Sales” Grow again on post-paid and on pre-paid Sales Force Sales Force development (rationalization / productivity) Value-based Commissioning 6 Structural Rethinking Efficiency Revision of go-to-market models and processes Renegotiation with suppliers Growth financing and sustain profitability Build a Solid Growth Platform for 2010 2
TIM PARTICIPAÇÕES S.A. | Investor Relations 1 Brand: Share of Voice Increase; Brand Growth of Recall, Appreciation and Brand Linkage Greater Efforts in Communication... ... with Good Campaign Results % share of investment Δ p.p. TIM TIM Terra Manifesto Player 1 Target Azul (May) Da Marca Player 2 (Mar) Player 3 87 40% 32% 78 35% 31% 76 30% 30% 75 30% 28% 28% 70 26% 29% 25% 24% 19% 46 20% 18% 21% 15% 17% 16% 32 15% 16% 10% 18 5% 20 2006 2007 2008 1H‘09 Ranking 3º 3º 4º 1º TIM Recall Appreciation Brand Linkage Δpp vs. leader -6 -13 -14 0 3 Source: Ibope Monitor/GRP, Data Folha, Synovate’s Image Research
TIM PARTICIPAÇÕES S.A. | Investor Relations Network 2 Network: Improvement of Service and Network Quality 2008 FY – Overall Service Quality Jan-Jun 2009 – Overall Service Quality % target achieved in overall service quality, TIM vs. competitors % target achieved in overall service quality, TIM vs. competitors 98.7% in June 4Q ‘08: 90.2% #6 #2 99.5% 98.0% 97.7% 99.9% 97.3% 97.0% 95.1% 93.4% 96.0% 93.4% 91.6% 90.7% 83.9% 76.9% Player 1 Player 2 Player 4 Player 5 Player 6 TIM Player 3 Player 1 TIM Player 5 Player 6 Player 4 Player 2 Player 3 Network Service Quality % target achieved in network quality , TIM vs. competitors % target achieved in TIM network quality Jan/09 Jun/09 Delta (p.p.) 99.5% 99.5% 98.9% 100.0% TIM 84.1% 100.0% +15.9 100,00% 96.7% 98,00% Main mobile 96,00% Player 1 100.0% 100.0% 0.0 84.6% 84.1% 84.1% 94,00% 92,00% operators 90,00% 88,00% 86,00% Player 2 95.7% 98.6% +2.9 84,00% 82,00% 80,00% Player 3 53.8% 50.0% -3.8 nov/08 dec/08 jan/09 feb/09 mar/09 apr/09 may/09 jun/09 4 Source: Anatel
TIM PARTICIPAÇÕES S.A. | Investor Relations Caring 3 Caring: Improvement in Customer Satisfaction Customer Satisfaction Evolution Costumer Care Index - Anatel TIM Player 2 Player 1 Player 3 8.6 8, 6 TIM 8.4 8, 4 Player 1 8, 2 8.1 Player 2 8.1 Player 3 8 8.0 8.0 Player 4 7.8 7.8 7, 8 Jan09 Feb09 Mar09 Apr09 May09 Jun09 Jul09 7, 6 m /6 ai0 u /6 j l 0 s t6 e/0 nov / 0 a n /7 j 0 m r7 a/0 m /7 ai0 u/7 j l 0 s t7 e/0 nov / 0 a n /8 j 0 m r8 a/0 m /8 ai0 u /8 j l 0 s t8 e/0 nov/ 0 a n /9 j 0 m r9 a/0 m /9 ai0 May Oct May Oct May Oct May 06 06 07 07 08 08 09 Evidences: . Reduction of # Lines / frequency of problems . Strong recovery in historically critical areas: SP, RJ and Mid-West Offering: . Improving on competitiveness in handset . Increase media presence . Launch of Infinity pre-paid plan TIM: recovery of client satisfaction after a negative 2008 CRM: . Pro-active replacement of handset based on value . Expansion of Premium cell Coverage: . Focus on areas with high concentration of high-value clients Source: Customer Satisfaction Monitoring (Bridge Research) 5
TIM PARTICIPAÇÕES S.A. | Investor Relations Ranking Offering 4 Offering: Inversion of Market Share Erosion Trend in net share TIM Net Adds and Net Share TIM Market Share 000’s lines, % % of market share Clean-up: 25.3 ~1Mln lines 25.1 25.0 24.7 24.5 Net share% 24.2 24.1 2008 2009 #1 #2 #1 23.7 23.8 23.6 23.6 23.5 23.5 2400% 37.7% 24.1% 32.2% 29.1% 0 0 2350% 0 2300% 0 2300% 0 0 Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul 09 09 09 2008 2009 17.4% % Net 2.000 1,729 TIM Customer Base Share 1.500 1,282 Mln lines 38.5 37.8 Net 1.000 37.2 36.4 36.6 36.5 Adds 35.8 36.1 35.7 36.1 34.7 35.2 500 34.2 0 2Q 2Q Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul QoQ Speed up: 2008 2009 •Net addtion: 1.7mi 2Q vs. 0.7*mi in 1Q09 Pre 28.4 29.8 29.9 31.6 •ARPU: R$26.6 2Q vs. R$26.0 in 1Q09 Post 6.8 6.6 6.2 6.2 *excluding clean-up base 6
TIM PARTICIPAÇÕES S.A. | Investor Relations Offering 4 Offering: Infinity Offer Results 2009 Infinity pre-paid base (000’s lines) ~2.500 Pre ~1.600 ~650 5 Mar Apr May Jun Infinity % Infinity in gross post voice consumer 34% Other Post plans 100% 66% Infinity ~0% May Jun 7
TIM PARTICIPAÇÕES S.A. | Investor Relations Sales 5 Sales Force: Stop-loss of Value Customers Base (Post-paid) Force Post-paid 2009 Post-paid Sales Excluding ~0,3Mln Re-launch lines clean-up Total Base Gross Adds 000’s lines, 2009 Churn Gross adds “Back to 1Q* Q1 AprApr May Mag Jun Giu Sales” Net Adds -- - + + Churn Pre-paid Excluding ~1Mln 2009 lines clean-up Gross Adds Pre-paid 1Q* 1Q Apr Apr May Mag Jun Giu Churn Growth Speed Net Adds up - + ++ ++ Reported Excluding ~0,7Mln lines clean-up 1Q* Apr May Jun Q1 Apr Mag Giu previa fechamento Net Adds + + ++ ++ 8 * monthly average in 1Q
TIM PARTICIPAÇÕES S.A. | Investor Relations Sales Force: Positive Balance on Post-Paid MNP and Speed up in Sales 5 Force Acquisition Dynamics Gap MNP Post-paid Gross Adds Post-paid (voice) % MNP Port In/ Port Out ’08 vs. ’09 Positive Balance on “The Turnaround” Consumer and Business segments -46% +29% +42% + 145% Consumer -34% +2% +13% 14 5 % Post- 12 5 % 113% 120% paid 10 % 5 107% Business “Zero balance” 85% 78% 69% 56% 55% 65% 44% 62% 45% 40% 24% 26% 46% 23% 25% 22% 25% 5% 14% Jan Feb Mar Apr May Jun Jan Feb Mar Apr May Jun 9 Note: Mobile NP
TIM PARTICIPAÇÕES S.A. | Investor Relations 6 Efficiency: Self-financing Brand Repositioning Plan Efficiency and Commercial Re-launch Total Cost Breakdown Costs Δ% 09 vs. 08, BRGAAP - 1% 1Q Advertising & Promotions + 41% Com- 2Q + 15% + 26% mercial Commercial* Bad Debt Evolution % Net Services Revenue, BR GAAP YTD + 8% Bad Debt -48% Improvement in -5% 1Q -5,00% 0,00% 5,00% 10,00% 15,00% 20,00% 9.6% acquisition quality 6.8% -6% 1Q 4.7% 4.1% 4.8% 3.6% Leased Lines +14% Indus- ~0 2Q trial -14% 2Q 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 Intercon- nection -20% -10% YTD -2% YTD -9% 1Q Personnel -18% HR, IT and G&A -10% 2Q G&A -6% -10% YTD Note: Excludes non organic effects: Embratel dispute agreement: - R$64 Mln (Mar/09); São Paulo inventories stolen : -R$21Mln (2Q09) -100,00% -50,00% 0,00% 10 *Includes COGS, Selling, CRM and Marketing Expenses
TIM PARTICIPAÇÕES S.A. | Investor Relations Econo Financials: Flat Revenues with Structural Increase of Profitability mics 7 Net Total Revenues Net Services Revenues Δ% 09 vs. 08, BR GAAP Δ% 09 vs. 08, BR GAAP 1Q + 0.6% -0.5% 1Q Issue: neutralize 2Q + 3.7% -1.2% 2Q 2008 negative waves (post and pre-paid) -0.8% 1H 1H + 2.2% -5,00% 0,00% EBITDA Growth EBITDA and EBITDA Margin Δ% 09 vs. 08, BR GAAP Δ basis points 09 vs. 08, BR GAAP 20.0% 22.3% 1Q + 14% 1Q 243 2008 2009 2Q + 16% 2Q 228 + 230 Basis points YoY 1H + 15% 1H 237 11
TIM PARTICIPAÇÕES S.A. | Investor Relations Econo 7 1st Wave 2008: Loss of Post-paid Voice Base mics 8Mln 6.8 TIM 6.2 Impact on Total Post-paid Revenues Post-paid 6Mln (FY 2009) Base 4Mln Loss of active voice ∆ Jan 09 Jun-08 Jun-09 post-paid lines: - 800K (lines) vs. Jan 08 Total market 25.3 29.0 x ARPU/ 25% post-paid active R$100 voice lines: TIM 20% -4pp Post-paid 20% -R$0.5 bn in 1H Mix ~ R$ 1 Bln 16% (%) 15% Jun-08 Jun-09 TIM 30% -6pp Post-paid 27% Market 25% 21% 2008 Delta 2009 Post-paid base Inertial Share Revenues Post-paid 15% Revenues Jun-08 Jun-09 12
TIM PARTICIPAÇÕES S.A. | Investor Relations Econo 7 2nd Wave 2008: Reduction in Pre-paid Base with Promos mics ARPU Promo base vs. Non-Promo base Impact on Total Pre-paid Revenues (FY 2009) Bln R$ ARPU Mainly in 2Q - + Promo Non-Promo Non-Promo Promo Active Base Active Base Mln lines Mln lines - + 2008 Promo Non-Promo 2009 Pre-paid Δ Base Δ Base Inertial Revenue Pre-paid Revenue 2008’s Mar 2008’s Mar Average 2009 Average 2009 13
TIM PARTICIPAÇÕES S.A. | Investor Relations Agenda Re-launch Plan: Key Actions and Results 2nd Quarter Results Build a Solid Platform for the Future Market Facts and Historical Data 14
TIM PARTICIPAÇÕES S.A. | Investor Relations 2Q09’s Main Results Subscribers base: +4.8% QoQ Net Revenue growth: +3.7% YoY to R$ 3,304 Mln Net Service Revenue: • +4.0% QoQ (and +9.7% QoQ in Total Net Revenue) • VAS: +12.5% QoQ e +21.7% YoY • Stop ARPU and MOU erosion on a quarterly basis Structural efficient growth: • Bad Debt at -47.9% YoY (and 3.6% of Net Services Revenue) • Interconnection & Network: -14.1% YoY • Personnel and G&A: -9.0% YoY and Commercial: +24.6% YoY Improving Profitability: EBITDA at R$ 736 Mln (+15.5% YoY) to a Margin of 22.3% (+230 bps YoY) Net Loss reduction: -R$ 15 Mln vs. -R$144 Mln in 1Q09 and -R$66 Mln in 2Q08 Positive Operating Free Cash Flow: R$ 407 Mln, +10% YoY… … with an improvement in the Net Financial Position: R$ 2,900 Mln, -R$117 Mln vs. 1Q09 15
TIM PARTICIPAÇÕES S.A. | Investor Relations Industry Overview Mn lines Mobile Fixed Fixed Broadband 83% 76% 78% 19% 20% 78% 81% 73% 73% 73% 14% 69% 10% 159.6 41.1 41.8 10.8 150.6 153.7 39.4 140.8 38.8 10.0 133.2 7.7 5.6 2Q08 3Q08 4Q08 1Q09 2Q09 2006 2007 2008 2Q09 2006 2007 2008 2Q09 % Penetration per % Penetration per total population Mobile lines total households Fixed Access MOBILE FIXED Market growth continues to be fueled by intense commercial New players has brought competition activity from major players and SIM-card only sales MOBILE BROADBAND FIXED BROADBAND Mobile broadband base ~3 million (Jun09) ADSL/Fixed Lines ~25% 2009 YTD mobile net addition surpassing fixed broadband ~42% of total access with speeds up to 500kps 16
TIM PARTICIPAÇÕES S.A. | Investor Relations Customer Base Stop Market Share Erosion… … through Revamp in Net Additions Million lines 25.4% Market 29.1% 23.5% 23.7% Share (%) Net 36.1 37.8 Share (%) 17.4% 17.2*% 33.8 ΔY/Y ΔQ/Q 1,729 ∆ Net Adds YoY: +35% 1,282 QoQ: +149%* 29.9 31.6 +17.1% +5.6% 27.0 Net Adds ~700* (000’s) 6.8 6.2 6.2 6.2 -8.9% +0,7% 2Q08 1Q09 2Q09 Post-paid Pre-paid (306) CB YoY 23.1% 11.0% 11.9% 2Q08 1Q09 2Q09 Growth (%) * Excluding the impact of ~1MM clean-up 17
TIM PARTICIPAÇÕES S.A. | Investor Relations Service Revenue KPI’s Revenues & KPI’s ARPU R$ Net Revenues R$ Mln ΔY/Y ΔQ/Q 29.8 26.0 26.6 3,186 3,304 +3.7% +9.7% 3,012 2Q08 1Q09 2Q09 YoY % -13.8% -11.7% -11.0% 2,971 2,936 -1.2% +4.0% 2,823 QoQ % +1.2% -13.1% +2.1% ∆ YoY ∆ QoQ 215 189 368 +70.8% +95.0% ARPM 0.37 0.36 0 0 , 4 22.2% -2.2% 2Q08 1Q09 2Q09 R$ 0 5 , 3 0.30 Net Service Revenue 0 0 , 3 Net Handset Revenue 0 5 , 2 ∆ YoY ∆ QoQ ΔY/Y ΔQ/Q 0 0 , 2 -27.1% +4.4% Gross VAS Rev. 397 430 483 +21.7% +12.5% 0 5 , 1 MOU 100 % VAS/ Service 9.8% 11.2% 12.3% +2.5pp +1.1pp Min. 70 73 Rev. Increased penetration of micro-browsing over total customers base 2Q08 1Q09 2Q09 18
TIM PARTICIPAÇÕES S.A. | Investor Relations Commercial Efforts …While Efficiency Plan Gets Maintained… .. delivering EBITDA Growth Traction... COGS Bad Debt R$ Mln R$ Mln -47.9% Gross Adds YoY: +20% -21.2% QoQ: +27% 60* EBITDA +43.7% 143 134 R$ Mln 106 +43.9% % of +15.5% 467 Net Serv. 2Q08 1Q09 2Q09 +20.8% Revenues 6.8%* 4.8% 3.6% 325 324 Personnel and G&A Costs R$ Mln 99 -9.0% 637 609 736 -3.7% 2Q08 1Q09 2Q09 Selling Expenses 277 261 252 2Q08 1Q09 2Q09 R$ Mln 2Q08 1Q09 2Q09 +24.6% Margin % 20.0% 20.2% 22.3% +16.9% Interconnection & Network Costs 829 R$ Mln 666 709 -14.1% -6.5% ∆ YoY Advertising 84 115 119 =1.4 x 1,073 985 921 2Q08 1Q09 2Q09 2Q08 1Q09 2Q09 19 * Telesales Impact
TIM PARTICIPAÇÕES S.A. | Investor Relations EBITDA and Bottom Line performance EBITDA Structurally Improve – Financing the Growth and the Repositioning EBITDA to Bottom Line performance R$ Million R$ Million EBITDA Depreciation & Net Financial Taxes and Net EBIT Result 2Q09 Amortization Expenses Others 152.6 (141.9) 36.9 97.4 (34.4) (163.4) 151.7 736.0 (647.5) 736.0 637.2 ~300 ~290 (~10% Serv. Rev.) (~10% Serv. Rev.) Investments on Savings Growth 88.6 (65.9) (38.0) (15.2) +R$99 Mln +15.5% EBITDA Service Handsets Advertising Network Other EBITDA 2Q08 637.2 (596.3) 40.8 (91.4) (15.7) (66.3) COGS Bad Debt 2Q08 Revenues Revenues & Sales Expenses Expenses* 2Q09 Δ YoY -1.2% +70.8 +43.7 +24.6 - - - YOY % +15.5% +8.6% +116.9% -27.9% +141.1% -77.0% % % % 14.1 47.9 13.1 Margin % % % 2Q09 vs. 20.0% 22.3% 1.2x 2.2x 0.2x % 2Q08 * Other Expenses include: G&A, Personnel and Net Other Operating Expenses/Revenues 20
TIM PARTICIPAÇÕES S.A. | Investor Relations Net Financial Position and Operating Free Cash Flow – 2Q09 Operating Free Cash Flow Net Debt R$ Million R$ Million Operating FCF Non % total revenues 1Q09 Op. FCF 2Q09 93 (422) 736 12.3% 11.6% -117 +10% 407 ~R$ 168 Mln of dividends 371 * EBITDA ΔWork. CAPEX Operating 2Q08 Cap. FCF (3,017) 407 (289) (2,900) * Excluding 3G license R$ 3.67 billion (of which 68% long term) Gross Debt ~33% of total debt is denominated in foreign currency (fully hedged) Average annual cost 10.95% in 2Q09 vs.11.64% in 2Q08 (and 12.47% in 1Q09) 21
TIM PARTICIPAÇÕES S.A. | Investor Relations Agenda Re-launch Plan: Key Actions and Results 2nd Quarter Results Build a Solid Platform for the Future Market Facts and Historical Data 22
TIM PARTICIPAÇÕES S.A. | Investor Relations Reshaping TIM Brasil: Build a Solid Growth Platform 2008 2009 Recovery in Brand Posiziona- Loss of Preference (-7 pp) and Top of Mind (-1 pp) - Preference mento mark Positioning Ranking #6 in Quality (Anatel) - Top of Mind Customer Satisfaction Index decrease (ranking #3) - Quality of Services (ranking Anatel) - Customer Satisfaction - 6 pp only at post 25.9% 25.4% 25.0% 24.2% 30,00% 23.5% 23.7% 30,00% MS Total 20,00% 20,00% Market 10,00% Reversal post-paid base erosion trend (value base) 10,00% Share Net adds pre 0,00% 0,00% Net adds -10,00% post voice -20,00% -20,00% 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 E 4Q09 E R$ Bln R$ Bln 26% EBITDA Margin 24% 20% 22% 18% 20% Keep growing in Economics revenue and Net Total +10% profitability +6% Revenues +6% +5% 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 E 4Q09 E Source: TIM internal data 23
TIM PARTICIPAÇÕES S.A. | Investor Relations The Path for 2009 1Q09 2Q09 3Q09 4Q09 New portfolio Offers: Usage stimulus, MOU growth. Strategy: Pure Mobile Commercial Push on New Ex: - April (Infinity Pre, Da Vinci) Offer Organization: new - “Recarga Imperdível” - June (Infinity Post, “Único”) - LD Infinity management Team Closing Intelig and Advertising: new format Sales channels Push : Market share Increase : - Back-to Post-paid - Post-paid Voice (BU/CO) capturing early synergies and greater presence in - MNP Focus - Infinity Pre-paid Push media Recovery of Top of Mind Recovery of Customer New Offers (July) Network Quality Satisfaction - 4 in 1 and Preference - New “Imperdível” Network Back to Sale Back to Talk Back to Growth and Brand recover Net Services ++ Revenue + Δ YoY - - Target: restructure the company, recovering strong positioning, sustaining profitability and cash flow 24
TIM PARTICIPAÇÕES S.A. | Investor Relations Improving Structural Efficiency of the Company 2009, BRGAAP Δ YoY Strict Rigor in Bad Debt + + % Net Service Revenue 2008 10% Commercial 7% 08 vs 07 09* vs 08 5% 4% 2009 4.8% Δ YoY + 3.6% HR, IT and 1Q 2Q 3Q* 4Q* G&A - Industrial Costs Variation 08 vs 07 09* vs 08 Δ YoY ITX Leased Lines Δ YoY + 08 vs 07 + ++ Industrial (Network) - - 08 vs 07 09* vs 08 09* vs 08 + Intelig We do not sacrifice growth to increase profitability We do not “buy" growth by destroying value 25 * 2009 Estimate
TIM PARTICIPAÇÕES S.A. | Investor Relations Main Takeaways 2Q Achievements 3Q Priorities Repositioning on track: • Brand • Positioning • Quality • Satisfaction •Stimulate Usage (MOU) Growth of net additions with ARPU increase •Post-paid Profitability preserve through efficiency QoQ improvement in all metrics •Profitability and cash generation Build a Solid Growth Platform for 2010 26
TIM PARTICIPAÇÕES S.A. | Investor Relations Re-launch Plan: Key Actions and Results 2nd Quarter Results Build a Solid Platform for the Future Market Facts and Historical Data 27
TIM PARTICIPAÇÕES S.A. | Investor Relations Market Facts Stock Performance Shareholders Structure TCLS4 TCSL3 IBOV TIM Part. Total (%) Control (%) Free float (%) Common 799,924,805 34% 650,537,118 40% 149,387,687 21% Preferred 1,548,522,231 66% 990,098,811 60% 558,423,420 79% Total 2,348,447,036 100% 1,640,635,929 100% 707,811,107 100% *in Aug 31, 2009 Telecom Italia 100% Aug08 Sep08 Oct08 Nov08 Dec08 Jan09 Feb09 Mar09 Apr09 May09 Jun09 Jul09 Aug09 TIM Brasil ON: 81% Market Panel* PN: 64% Total: 70% Market Capitalization: R$ 10.49 Billion Market Capitalization: US$ 5.80 Billion TIM Participações Stock Exchange: BOVESPA Stock Exchange: BOVESPA Stock Exchange: NYSE 100% Ticker Symbol: TCSL4 (Preferred) Ticker Symbol: TCSL3 (Common) Ticker Symbol: TSU (ADR) Price: R$ 3.96 Price: R$ 5.45 Price: US$ 21.26 TIM Celular 52 Week Price Range: 52 Week Price Range: 52 Week Price Range: 100% High – R$ 4.50 High – R$ 7.95 High – US$ 23.68 Low – R$ 2.42 Low – R$ 4.49 Low – US$ 11.44 TIM Nordeste *All Market Panel data refer to Aug 31th, 2009 28
TIM PARTICIPAÇÕES S.A. | Investor Relations Historical indicators: operational results QoQ YoY 2Q09 1Q09 2Q08 % % Brazilian Wireless Subscriber Base (million) 159,6 153,7 133,2 3,9% 19,9% Estimated Total Penetration 83,5% 80,6% 69,5% 2,9 p.p. 14,0 p.p. Municipalities Served - TIM GSM 2.944 2.772 2.733 6,2% 7,7% Market Share 23,7% 23,5% 25,4% 0,2 p.p. -1,7 p.p. Total Lines ('000) 37.826 36.096 33.815 4,8% 11,9% Prepaid 31.610 29.923 26.993 5,6% 17,1% Postpaid 6.216 6.174 6.821 0,7% -8,9% Gross Additions ('000) 4.855 3.836 4.046 26,6% 20,0% Net Additions ('000) 1.729 -306 1.282 n.m. 34,9% Churn 8,6% 11,4% 8,4% -2,8 p.p 0,2 p.p ARPU (R$) 26,6 26,0 29,8 2,1% -11,0% MOU 73 70 100 4,4% -27,1% ARPM (R$) 0,36 0,37 0,30 -2,2% 22,2% SAC (R$) 120 135 119 -10,7% 0,9% Investment (R$ million) 422,5 194,4 1.706,3 117,3% -75,2% Employees 10.174 10.212 10.253 -0,4% -0,8% Numbers may differ from the previous publishing due to rounding 29
TIM PARTICIPAÇÕES S.A. | Investor Relations Historical indicators: financial results R$ (Thousands) 2007 1Q08 2Q08 3Q08 4Q08 2008 1Q09 2Q09 QoQ % YoY % Net Revenues 12,441,643 2,992,957 3,186,075 3,357,794 3,544,138 13,080,965 3,011,668 3,304,252 9.7% 3.7% Services 11,421,037 2,837,663 2,970,664 3,065,744 3,222,737 12,096,808 2,822,979 2,936,240 4.0% -1.2% Handset Revenue 1,020,606 155,294 215,411 292,051 321,401 984,157 188,689 368,012 95.0% 70.8% Operating Expenses (9,601,330) (2,460,169) (2,548,906) (2,559,338) (2,613,134) (10,181,547) (2,402,216) (2,568,235) 6.9% 0.8% Personal Expenses (625,398) (162,625) (168,697) (152,654) (164,186) (648,162) (157,959) (138,181) -12.5% -18.1% Selling and Marketing Expenses (2,512,078) (598,141) (665,621) (715,019) (708,347) (2,687,128) (709,130) (829,036) 16.9% 24.6% Network & Interconnection (3,865,089) (1,044,547) (1,072,570) (1,077,171) (1,048,241) (4,242,530) (984,633) (920,902) -6.5% -14.1% General & Administrative (429,699) (123,779) (107,984) (101,496) (118,883) (452,143) (103,488) (113,542) 9.7% 5.1% Cost of Goods Sold (1,434,431) (263,235) (324,831) (378,072) (439,650) (1,405,788) (324,451) (466,727) 43.9% 43.7% Bad Debt (714,571) (271,701) (203,327) (143,250) (130,554) (748,833) (134,453) (105,949) -21.2% -47.9% Other operational revenues (expenses) (20,065) 3,859 (5,876) 8,325 (3,272) 3,036 11,897 6,102 -48.7% -203.8% EBITDA 2,840,313 532,788 637,169 798,456 931,004 2,899,418 609,451 736,016 20.8% 15.5% EBITDA - Margin over total net revenues 22.8% 17.8% 20.0% 23.8% 26.3% 22.2% 20.2% 22.3% 2.1 p.p. 2.3 p.p. Depreciation & Amortization (2,323,674) (572,033) (596,338) (617,988) (622,185) (2,408,545) (641,222) (647,451) 1.0% 8.6% EBIT 516,639 (39,245) 40,831 180,468 308,818 490,872 (31,771) 88,565 -378.8% 116.9% Net Financial Results (281,500) (73,609) (91,382) (152,943) (57,041) (374,974) (69,314) (65,857) -5.0% -27.9% Income (loss) before taxes and Minorities 235,139 (112,854) (50,552) 27,526 251,778 115,898 (101,085) 22,708 -122.5% -144.9% Income tax and social contribution (166,837) (12,613) (15,743) (39,579) 132,188 64,254 (42,929) (37,956) -11.6% 141.1% Net Income (Loss) 68,302 (125,466) (66,295) (12,053) 383,966 180,152 (144,014) (15,247) -89.4% -77.0% Numbers may differ from the previous publishing due to rounding 30
TIM PARTICIPAÇÕES S.A. | Investor Relations “Safe Harbor” statements Statements in this presentation, as well as oral statements made by the management of TIM Participações S.A. (the “Company”, or “TIM”), 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. Investor Relations Visit our Website Avenida das Américas, 3434 - Bloco 01 http://www.tim.com.br/ri 6° andar – Barra da Tijuca 22640-102 Rio de Janeiro, RJ Phone: +55 21 4009-3742 / 4009-3446 / 4009-4017 Fax: +55 21 4009-3990 31
TIM PARTICIPAÇÕES S.A. | Investor Relations 32

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Tim Presentation Goldman Sachs Conference Set09 Eng

  • 1. TIM Participações S.A Goldman Sachs Communacopia XVIII Conference September 17th, 2009 0
  • 2. TIM PARTICIPAÇÕES S.A. | Investor Relations Agenda Re-launch Plan: Key Actions and Results 2nd Quarter Results Build a Solid Platform for the Long Term Market Facts and Historical Data 1
  • 3. TIM PARTICIPAÇÕES S.A. | Investor Relations Re-launch Plan: Key Actions Actions in Course Repositioning 1 Share of voice increase Brand New format to increase recall and brand linkage Coherence and brand recognition 7 2 Focus on 2G Service Quality : Network 2G: excellence on voice quality 3G: “right on spot” React to 2008’s 3 Selectivity and Multi-channeling inertia on revenues: Caring Services improvement: better flow over demand Caring model evolution: service level vs. client value - minimizing impact 4 Distinctiveness and Innovation on 2009… Offering Infinity pre and post Shock offering: “Recarga Imperdível” - …and preserving “Azul” (DDD = local) “TIM Único” profitability 5 “Back to Sales” Grow again on post-paid and on pre-paid Sales Force Sales Force development (rationalization / productivity) Value-based Commissioning 6 Structural Rethinking Efficiency Revision of go-to-market models and processes Renegotiation with suppliers Growth financing and sustain profitability Build a Solid Growth Platform for 2010 2
  • 4. TIM PARTICIPAÇÕES S.A. | Investor Relations 1 Brand: Share of Voice Increase; Brand Growth of Recall, Appreciation and Brand Linkage Greater Efforts in Communication... ... with Good Campaign Results % share of investment Δ p.p. TIM TIM Terra Manifesto Player 1 Target Azul (May) Da Marca Player 2 (Mar) Player 3 87 40% 32% 78 35% 31% 76 30% 30% 75 30% 28% 28% 70 26% 29% 25% 24% 19% 46 20% 18% 21% 15% 17% 16% 32 15% 16% 10% 18 5% 20 2006 2007 2008 1H‘09 Ranking 3º 3º 4º 1º TIM Recall Appreciation Brand Linkage Δpp vs. leader -6 -13 -14 0 3 Source: Ibope Monitor/GRP, Data Folha, Synovate’s Image Research
  • 5. TIM PARTICIPAÇÕES S.A. | Investor Relations Network 2 Network: Improvement of Service and Network Quality 2008 FY – Overall Service Quality Jan-Jun 2009 – Overall Service Quality % target achieved in overall service quality, TIM vs. competitors % target achieved in overall service quality, TIM vs. competitors 98.7% in June 4Q ‘08: 90.2% #6 #2 99.5% 98.0% 97.7% 99.9% 97.3% 97.0% 95.1% 93.4% 96.0% 93.4% 91.6% 90.7% 83.9% 76.9% Player 1 Player 2 Player 4 Player 5 Player 6 TIM Player 3 Player 1 TIM Player 5 Player 6 Player 4 Player 2 Player 3 Network Service Quality % target achieved in network quality , TIM vs. competitors % target achieved in TIM network quality Jan/09 Jun/09 Delta (p.p.) 99.5% 99.5% 98.9% 100.0% TIM 84.1% 100.0% +15.9 100,00% 96.7% 98,00% Main mobile 96,00% Player 1 100.0% 100.0% 0.0 84.6% 84.1% 84.1% 94,00% 92,00% operators 90,00% 88,00% 86,00% Player 2 95.7% 98.6% +2.9 84,00% 82,00% 80,00% Player 3 53.8% 50.0% -3.8 nov/08 dec/08 jan/09 feb/09 mar/09 apr/09 may/09 jun/09 4 Source: Anatel
  • 6. TIM PARTICIPAÇÕES S.A. | Investor Relations Caring 3 Caring: Improvement in Customer Satisfaction Customer Satisfaction Evolution Costumer Care Index - Anatel TIM Player 2 Player 1 Player 3 8.6 8, 6 TIM 8.4 8, 4 Player 1 8, 2 8.1 Player 2 8.1 Player 3 8 8.0 8.0 Player 4 7.8 7.8 7, 8 Jan09 Feb09 Mar09 Apr09 May09 Jun09 Jul09 7, 6 m /6 ai0 u /6 j l 0 s t6 e/0 nov / 0 a n /7 j 0 m r7 a/0 m /7 ai0 u/7 j l 0 s t7 e/0 nov / 0 a n /8 j 0 m r8 a/0 m /8 ai0 u /8 j l 0 s t8 e/0 nov/ 0 a n /9 j 0 m r9 a/0 m /9 ai0 May Oct May Oct May Oct May 06 06 07 07 08 08 09 Evidences: . Reduction of # Lines / frequency of problems . Strong recovery in historically critical areas: SP, RJ and Mid-West Offering: . Improving on competitiveness in handset . Increase media presence . Launch of Infinity pre-paid plan TIM: recovery of client satisfaction after a negative 2008 CRM: . Pro-active replacement of handset based on value . Expansion of Premium cell Coverage: . Focus on areas with high concentration of high-value clients Source: Customer Satisfaction Monitoring (Bridge Research) 5
  • 7. TIM PARTICIPAÇÕES S.A. | Investor Relations Ranking Offering 4 Offering: Inversion of Market Share Erosion Trend in net share TIM Net Adds and Net Share TIM Market Share 000’s lines, % % of market share Clean-up: 25.3 ~1Mln lines 25.1 25.0 24.7 24.5 Net share% 24.2 24.1 2008 2009 #1 #2 #1 23.7 23.8 23.6 23.6 23.5 23.5 2400% 37.7% 24.1% 32.2% 29.1% 0 0 2350% 0 2300% 0 2300% 0 0 Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul 09 09 09 2008 2009 17.4% % Net 2.000 1,729 TIM Customer Base Share 1.500 1,282 Mln lines 38.5 37.8 Net 1.000 37.2 36.4 36.6 36.5 Adds 35.8 36.1 35.7 36.1 34.7 35.2 500 34.2 0 2Q 2Q Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul QoQ Speed up: 2008 2009 •Net addtion: 1.7mi 2Q vs. 0.7*mi in 1Q09 Pre 28.4 29.8 29.9 31.6 •ARPU: R$26.6 2Q vs. R$26.0 in 1Q09 Post 6.8 6.6 6.2 6.2 *excluding clean-up base 6
  • 8. TIM PARTICIPAÇÕES S.A. | Investor Relations Offering 4 Offering: Infinity Offer Results 2009 Infinity pre-paid base (000’s lines) ~2.500 Pre ~1.600 ~650 5 Mar Apr May Jun Infinity % Infinity in gross post voice consumer 34% Other Post plans 100% 66% Infinity ~0% May Jun 7
  • 9. TIM PARTICIPAÇÕES S.A. | Investor Relations Sales 5 Sales Force: Stop-loss of Value Customers Base (Post-paid) Force Post-paid 2009 Post-paid Sales Excluding ~0,3Mln Re-launch lines clean-up Total Base Gross Adds 000’s lines, 2009 Churn Gross adds “Back to 1Q* Q1 AprApr May Mag Jun Giu Sales” Net Adds -- - + + Churn Pre-paid Excluding ~1Mln 2009 lines clean-up Gross Adds Pre-paid 1Q* 1Q Apr Apr May Mag Jun Giu Churn Growth Speed Net Adds up - + ++ ++ Reported Excluding ~0,7Mln lines clean-up 1Q* Apr May Jun Q1 Apr Mag Giu previa fechamento Net Adds + + ++ ++ 8 * monthly average in 1Q
  • 10. TIM PARTICIPAÇÕES S.A. | Investor Relations Sales Force: Positive Balance on Post-Paid MNP and Speed up in Sales 5 Force Acquisition Dynamics Gap MNP Post-paid Gross Adds Post-paid (voice) % MNP Port In/ Port Out ’08 vs. ’09 Positive Balance on “The Turnaround” Consumer and Business segments -46% +29% +42% + 145% Consumer -34% +2% +13% 14 5 % Post- 12 5 % 113% 120% paid 10 % 5 107% Business “Zero balance” 85% 78% 69% 56% 55% 65% 44% 62% 45% 40% 24% 26% 46% 23% 25% 22% 25% 5% 14% Jan Feb Mar Apr May Jun Jan Feb Mar Apr May Jun 9 Note: Mobile NP
  • 11. TIM PARTICIPAÇÕES S.A. | Investor Relations 6 Efficiency: Self-financing Brand Repositioning Plan Efficiency and Commercial Re-launch Total Cost Breakdown Costs Δ% 09 vs. 08, BRGAAP - 1% 1Q Advertising & Promotions + 41% Com- 2Q + 15% + 26% mercial Commercial* Bad Debt Evolution % Net Services Revenue, BR GAAP YTD + 8% Bad Debt -48% Improvement in -5% 1Q -5,00% 0,00% 5,00% 10,00% 15,00% 20,00% 9.6% acquisition quality 6.8% -6% 1Q 4.7% 4.1% 4.8% 3.6% Leased Lines +14% Indus- ~0 2Q trial -14% 2Q 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 Intercon- nection -20% -10% YTD -2% YTD -9% 1Q Personnel -18% HR, IT and G&A -10% 2Q G&A -6% -10% YTD Note: Excludes non organic effects: Embratel dispute agreement: - R$64 Mln (Mar/09); São Paulo inventories stolen : -R$21Mln (2Q09) -100,00% -50,00% 0,00% 10 *Includes COGS, Selling, CRM and Marketing Expenses
  • 12. TIM PARTICIPAÇÕES S.A. | Investor Relations Econo Financials: Flat Revenues with Structural Increase of Profitability mics 7 Net Total Revenues Net Services Revenues Δ% 09 vs. 08, BR GAAP Δ% 09 vs. 08, BR GAAP 1Q + 0.6% -0.5% 1Q Issue: neutralize 2Q + 3.7% -1.2% 2Q 2008 negative waves (post and pre-paid) -0.8% 1H 1H + 2.2% -5,00% 0,00% EBITDA Growth EBITDA and EBITDA Margin Δ% 09 vs. 08, BR GAAP Δ basis points 09 vs. 08, BR GAAP 20.0% 22.3% 1Q + 14% 1Q 243 2008 2009 2Q + 16% 2Q 228 + 230 Basis points YoY 1H + 15% 1H 237 11
  • 13. TIM PARTICIPAÇÕES S.A. | Investor Relations Econo 7 1st Wave 2008: Loss of Post-paid Voice Base mics 8Mln 6.8 TIM 6.2 Impact on Total Post-paid Revenues Post-paid 6Mln (FY 2009) Base 4Mln Loss of active voice ∆ Jan 09 Jun-08 Jun-09 post-paid lines: - 800K (lines) vs. Jan 08 Total market 25.3 29.0 x ARPU/ 25% post-paid active R$100 voice lines: TIM 20% -4pp Post-paid 20% -R$0.5 bn in 1H Mix ~ R$ 1 Bln 16% (%) 15% Jun-08 Jun-09 TIM 30% -6pp Post-paid 27% Market 25% 21% 2008 Delta 2009 Post-paid base Inertial Share Revenues Post-paid 15% Revenues Jun-08 Jun-09 12
  • 14. TIM PARTICIPAÇÕES S.A. | Investor Relations Econo 7 2nd Wave 2008: Reduction in Pre-paid Base with Promos mics ARPU Promo base vs. Non-Promo base Impact on Total Pre-paid Revenues (FY 2009) Bln R$ ARPU Mainly in 2Q - + Promo Non-Promo Non-Promo Promo Active Base Active Base Mln lines Mln lines - + 2008 Promo Non-Promo 2009 Pre-paid Δ Base Δ Base Inertial Revenue Pre-paid Revenue 2008’s Mar 2008’s Mar Average 2009 Average 2009 13
  • 15. TIM PARTICIPAÇÕES S.A. | Investor Relations Agenda Re-launch Plan: Key Actions and Results 2nd Quarter Results Build a Solid Platform for the Future Market Facts and Historical Data 14
  • 16. TIM PARTICIPAÇÕES S.A. | Investor Relations 2Q09’s Main Results Subscribers base: +4.8% QoQ Net Revenue growth: +3.7% YoY to R$ 3,304 Mln Net Service Revenue: • +4.0% QoQ (and +9.7% QoQ in Total Net Revenue) • VAS: +12.5% QoQ e +21.7% YoY • Stop ARPU and MOU erosion on a quarterly basis Structural efficient growth: • Bad Debt at -47.9% YoY (and 3.6% of Net Services Revenue) • Interconnection & Network: -14.1% YoY • Personnel and G&A: -9.0% YoY and Commercial: +24.6% YoY Improving Profitability: EBITDA at R$ 736 Mln (+15.5% YoY) to a Margin of 22.3% (+230 bps YoY) Net Loss reduction: -R$ 15 Mln vs. -R$144 Mln in 1Q09 and -R$66 Mln in 2Q08 Positive Operating Free Cash Flow: R$ 407 Mln, +10% YoY… … with an improvement in the Net Financial Position: R$ 2,900 Mln, -R$117 Mln vs. 1Q09 15
  • 17. TIM PARTICIPAÇÕES S.A. | Investor Relations Industry Overview Mn lines Mobile Fixed Fixed Broadband 83% 76% 78% 19% 20% 78% 81% 73% 73% 73% 14% 69% 10% 159.6 41.1 41.8 10.8 150.6 153.7 39.4 140.8 38.8 10.0 133.2 7.7 5.6 2Q08 3Q08 4Q08 1Q09 2Q09 2006 2007 2008 2Q09 2006 2007 2008 2Q09 % Penetration per % Penetration per total population Mobile lines total households Fixed Access MOBILE FIXED Market growth continues to be fueled by intense commercial New players has brought competition activity from major players and SIM-card only sales MOBILE BROADBAND FIXED BROADBAND Mobile broadband base ~3 million (Jun09) ADSL/Fixed Lines ~25% 2009 YTD mobile net addition surpassing fixed broadband ~42% of total access with speeds up to 500kps 16
  • 18. TIM PARTICIPAÇÕES S.A. | Investor Relations Customer Base Stop Market Share Erosion… … through Revamp in Net Additions Million lines 25.4% Market 29.1% 23.5% 23.7% Share (%) Net 36.1 37.8 Share (%) 17.4% 17.2*% 33.8 ΔY/Y ΔQ/Q 1,729 ∆ Net Adds YoY: +35% 1,282 QoQ: +149%* 29.9 31.6 +17.1% +5.6% 27.0 Net Adds ~700* (000’s) 6.8 6.2 6.2 6.2 -8.9% +0,7% 2Q08 1Q09 2Q09 Post-paid Pre-paid (306) CB YoY 23.1% 11.0% 11.9% 2Q08 1Q09 2Q09 Growth (%) * Excluding the impact of ~1MM clean-up 17
  • 19. TIM PARTICIPAÇÕES S.A. | Investor Relations Service Revenue KPI’s Revenues & KPI’s ARPU R$ Net Revenues R$ Mln ΔY/Y ΔQ/Q 29.8 26.0 26.6 3,186 3,304 +3.7% +9.7% 3,012 2Q08 1Q09 2Q09 YoY % -13.8% -11.7% -11.0% 2,971 2,936 -1.2% +4.0% 2,823 QoQ % +1.2% -13.1% +2.1% ∆ YoY ∆ QoQ 215 189 368 +70.8% +95.0% ARPM 0.37 0.36 0 0 , 4 22.2% -2.2% 2Q08 1Q09 2Q09 R$ 0 5 , 3 0.30 Net Service Revenue 0 0 , 3 Net Handset Revenue 0 5 , 2 ∆ YoY ∆ QoQ ΔY/Y ΔQ/Q 0 0 , 2 -27.1% +4.4% Gross VAS Rev. 397 430 483 +21.7% +12.5% 0 5 , 1 MOU 100 % VAS/ Service 9.8% 11.2% 12.3% +2.5pp +1.1pp Min. 70 73 Rev. Increased penetration of micro-browsing over total customers base 2Q08 1Q09 2Q09 18
  • 20. TIM PARTICIPAÇÕES S.A. | Investor Relations Commercial Efforts …While Efficiency Plan Gets Maintained… .. delivering EBITDA Growth Traction... COGS Bad Debt R$ Mln R$ Mln -47.9% Gross Adds YoY: +20% -21.2% QoQ: +27% 60* EBITDA +43.7% 143 134 R$ Mln 106 +43.9% % of +15.5% 467 Net Serv. 2Q08 1Q09 2Q09 +20.8% Revenues 6.8%* 4.8% 3.6% 325 324 Personnel and G&A Costs R$ Mln 99 -9.0% 637 609 736 -3.7% 2Q08 1Q09 2Q09 Selling Expenses 277 261 252 2Q08 1Q09 2Q09 R$ Mln 2Q08 1Q09 2Q09 +24.6% Margin % 20.0% 20.2% 22.3% +16.9% Interconnection & Network Costs 829 R$ Mln 666 709 -14.1% -6.5% ∆ YoY Advertising 84 115 119 =1.4 x 1,073 985 921 2Q08 1Q09 2Q09 2Q08 1Q09 2Q09 19 * Telesales Impact
  • 21. TIM PARTICIPAÇÕES S.A. | Investor Relations EBITDA and Bottom Line performance EBITDA Structurally Improve – Financing the Growth and the Repositioning EBITDA to Bottom Line performance R$ Million R$ Million EBITDA Depreciation & Net Financial Taxes and Net EBIT Result 2Q09 Amortization Expenses Others 152.6 (141.9) 36.9 97.4 (34.4) (163.4) 151.7 736.0 (647.5) 736.0 637.2 ~300 ~290 (~10% Serv. Rev.) (~10% Serv. Rev.) Investments on Savings Growth 88.6 (65.9) (38.0) (15.2) +R$99 Mln +15.5% EBITDA Service Handsets Advertising Network Other EBITDA 2Q08 637.2 (596.3) 40.8 (91.4) (15.7) (66.3) COGS Bad Debt 2Q08 Revenues Revenues & Sales Expenses Expenses* 2Q09 Δ YoY -1.2% +70.8 +43.7 +24.6 - - - YOY % +15.5% +8.6% +116.9% -27.9% +141.1% -77.0% % % % 14.1 47.9 13.1 Margin % % % 2Q09 vs. 20.0% 22.3% 1.2x 2.2x 0.2x % 2Q08 * Other Expenses include: G&A, Personnel and Net Other Operating Expenses/Revenues 20
  • 22. TIM PARTICIPAÇÕES S.A. | Investor Relations Net Financial Position and Operating Free Cash Flow – 2Q09 Operating Free Cash Flow Net Debt R$ Million R$ Million Operating FCF Non % total revenues 1Q09 Op. FCF 2Q09 93 (422) 736 12.3% 11.6% -117 +10% 407 ~R$ 168 Mln of dividends 371 * EBITDA ΔWork. CAPEX Operating 2Q08 Cap. FCF (3,017) 407 (289) (2,900) * Excluding 3G license R$ 3.67 billion (of which 68% long term) Gross Debt ~33% of total debt is denominated in foreign currency (fully hedged) Average annual cost 10.95% in 2Q09 vs.11.64% in 2Q08 (and 12.47% in 1Q09) 21
  • 23. TIM PARTICIPAÇÕES S.A. | Investor Relations Agenda Re-launch Plan: Key Actions and Results 2nd Quarter Results Build a Solid Platform for the Future Market Facts and Historical Data 22
  • 24. TIM PARTICIPAÇÕES S.A. | Investor Relations Reshaping TIM Brasil: Build a Solid Growth Platform 2008 2009 Recovery in Brand Posiziona- Loss of Preference (-7 pp) and Top of Mind (-1 pp) - Preference mento mark Positioning Ranking #6 in Quality (Anatel) - Top of Mind Customer Satisfaction Index decrease (ranking #3) - Quality of Services (ranking Anatel) - Customer Satisfaction - 6 pp only at post 25.9% 25.4% 25.0% 24.2% 30,00% 23.5% 23.7% 30,00% MS Total 20,00% 20,00% Market 10,00% Reversal post-paid base erosion trend (value base) 10,00% Share Net adds pre 0,00% 0,00% Net adds -10,00% post voice -20,00% -20,00% 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 E 4Q09 E R$ Bln R$ Bln 26% EBITDA Margin 24% 20% 22% 18% 20% Keep growing in Economics revenue and Net Total +10% profitability +6% Revenues +6% +5% 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 E 4Q09 E Source: TIM internal data 23
  • 25. TIM PARTICIPAÇÕES S.A. | Investor Relations The Path for 2009 1Q09 2Q09 3Q09 4Q09 New portfolio Offers: Usage stimulus, MOU growth. Strategy: Pure Mobile Commercial Push on New Ex: - April (Infinity Pre, Da Vinci) Offer Organization: new - “Recarga Imperdível” - June (Infinity Post, “Único”) - LD Infinity management Team Closing Intelig and Advertising: new format Sales channels Push : Market share Increase : - Back-to Post-paid - Post-paid Voice (BU/CO) capturing early synergies and greater presence in - MNP Focus - Infinity Pre-paid Push media Recovery of Top of Mind Recovery of Customer New Offers (July) Network Quality Satisfaction - 4 in 1 and Preference - New “Imperdível” Network Back to Sale Back to Talk Back to Growth and Brand recover Net Services ++ Revenue + Δ YoY - - Target: restructure the company, recovering strong positioning, sustaining profitability and cash flow 24
  • 26. TIM PARTICIPAÇÕES S.A. | Investor Relations Improving Structural Efficiency of the Company 2009, BRGAAP Δ YoY Strict Rigor in Bad Debt + + % Net Service Revenue 2008 10% Commercial 7% 08 vs 07 09* vs 08 5% 4% 2009 4.8% Δ YoY + 3.6% HR, IT and 1Q 2Q 3Q* 4Q* G&A - Industrial Costs Variation 08 vs 07 09* vs 08 Δ YoY ITX Leased Lines Δ YoY + 08 vs 07 + ++ Industrial (Network) - - 08 vs 07 09* vs 08 09* vs 08 + Intelig We do not sacrifice growth to increase profitability We do not “buy" growth by destroying value 25 * 2009 Estimate
  • 27. TIM PARTICIPAÇÕES S.A. | Investor Relations Main Takeaways 2Q Achievements 3Q Priorities Repositioning on track: • Brand • Positioning • Quality • Satisfaction •Stimulate Usage (MOU) Growth of net additions with ARPU increase •Post-paid Profitability preserve through efficiency QoQ improvement in all metrics •Profitability and cash generation Build a Solid Growth Platform for 2010 26
  • 28. TIM PARTICIPAÇÕES S.A. | Investor Relations Re-launch Plan: Key Actions and Results 2nd Quarter Results Build a Solid Platform for the Future Market Facts and Historical Data 27
  • 29. TIM PARTICIPAÇÕES S.A. | Investor Relations Market Facts Stock Performance Shareholders Structure TCLS4 TCSL3 IBOV TIM Part. Total (%) Control (%) Free float (%) Common 799,924,805 34% 650,537,118 40% 149,387,687 21% Preferred 1,548,522,231 66% 990,098,811 60% 558,423,420 79% Total 2,348,447,036 100% 1,640,635,929 100% 707,811,107 100% *in Aug 31, 2009 Telecom Italia 100% Aug08 Sep08 Oct08 Nov08 Dec08 Jan09 Feb09 Mar09 Apr09 May09 Jun09 Jul09 Aug09 TIM Brasil ON: 81% Market Panel* PN: 64% Total: 70% Market Capitalization: R$ 10.49 Billion Market Capitalization: US$ 5.80 Billion TIM Participações Stock Exchange: BOVESPA Stock Exchange: BOVESPA Stock Exchange: NYSE 100% Ticker Symbol: TCSL4 (Preferred) Ticker Symbol: TCSL3 (Common) Ticker Symbol: TSU (ADR) Price: R$ 3.96 Price: R$ 5.45 Price: US$ 21.26 TIM Celular 52 Week Price Range: 52 Week Price Range: 52 Week Price Range: 100% High – R$ 4.50 High – R$ 7.95 High – US$ 23.68 Low – R$ 2.42 Low – R$ 4.49 Low – US$ 11.44 TIM Nordeste *All Market Panel data refer to Aug 31th, 2009 28
  • 30. TIM PARTICIPAÇÕES S.A. | Investor Relations Historical indicators: operational results QoQ YoY 2Q09 1Q09 2Q08 % % Brazilian Wireless Subscriber Base (million) 159,6 153,7 133,2 3,9% 19,9% Estimated Total Penetration 83,5% 80,6% 69,5% 2,9 p.p. 14,0 p.p. Municipalities Served - TIM GSM 2.944 2.772 2.733 6,2% 7,7% Market Share 23,7% 23,5% 25,4% 0,2 p.p. -1,7 p.p. Total Lines ('000) 37.826 36.096 33.815 4,8% 11,9% Prepaid 31.610 29.923 26.993 5,6% 17,1% Postpaid 6.216 6.174 6.821 0,7% -8,9% Gross Additions ('000) 4.855 3.836 4.046 26,6% 20,0% Net Additions ('000) 1.729 -306 1.282 n.m. 34,9% Churn 8,6% 11,4% 8,4% -2,8 p.p 0,2 p.p ARPU (R$) 26,6 26,0 29,8 2,1% -11,0% MOU 73 70 100 4,4% -27,1% ARPM (R$) 0,36 0,37 0,30 -2,2% 22,2% SAC (R$) 120 135 119 -10,7% 0,9% Investment (R$ million) 422,5 194,4 1.706,3 117,3% -75,2% Employees 10.174 10.212 10.253 -0,4% -0,8% Numbers may differ from the previous publishing due to rounding 29
  • 31. TIM PARTICIPAÇÕES S.A. | Investor Relations Historical indicators: financial results R$ (Thousands) 2007 1Q08 2Q08 3Q08 4Q08 2008 1Q09 2Q09 QoQ % YoY % Net Revenues 12,441,643 2,992,957 3,186,075 3,357,794 3,544,138 13,080,965 3,011,668 3,304,252 9.7% 3.7% Services 11,421,037 2,837,663 2,970,664 3,065,744 3,222,737 12,096,808 2,822,979 2,936,240 4.0% -1.2% Handset Revenue 1,020,606 155,294 215,411 292,051 321,401 984,157 188,689 368,012 95.0% 70.8% Operating Expenses (9,601,330) (2,460,169) (2,548,906) (2,559,338) (2,613,134) (10,181,547) (2,402,216) (2,568,235) 6.9% 0.8% Personal Expenses (625,398) (162,625) (168,697) (152,654) (164,186) (648,162) (157,959) (138,181) -12.5% -18.1% Selling and Marketing Expenses (2,512,078) (598,141) (665,621) (715,019) (708,347) (2,687,128) (709,130) (829,036) 16.9% 24.6% Network & Interconnection (3,865,089) (1,044,547) (1,072,570) (1,077,171) (1,048,241) (4,242,530) (984,633) (920,902) -6.5% -14.1% General & Administrative (429,699) (123,779) (107,984) (101,496) (118,883) (452,143) (103,488) (113,542) 9.7% 5.1% Cost of Goods Sold (1,434,431) (263,235) (324,831) (378,072) (439,650) (1,405,788) (324,451) (466,727) 43.9% 43.7% Bad Debt (714,571) (271,701) (203,327) (143,250) (130,554) (748,833) (134,453) (105,949) -21.2% -47.9% Other operational revenues (expenses) (20,065) 3,859 (5,876) 8,325 (3,272) 3,036 11,897 6,102 -48.7% -203.8% EBITDA 2,840,313 532,788 637,169 798,456 931,004 2,899,418 609,451 736,016 20.8% 15.5% EBITDA - Margin over total net revenues 22.8% 17.8% 20.0% 23.8% 26.3% 22.2% 20.2% 22.3% 2.1 p.p. 2.3 p.p. Depreciation & Amortization (2,323,674) (572,033) (596,338) (617,988) (622,185) (2,408,545) (641,222) (647,451) 1.0% 8.6% EBIT 516,639 (39,245) 40,831 180,468 308,818 490,872 (31,771) 88,565 -378.8% 116.9% Net Financial Results (281,500) (73,609) (91,382) (152,943) (57,041) (374,974) (69,314) (65,857) -5.0% -27.9% Income (loss) before taxes and Minorities 235,139 (112,854) (50,552) 27,526 251,778 115,898 (101,085) 22,708 -122.5% -144.9% Income tax and social contribution (166,837) (12,613) (15,743) (39,579) 132,188 64,254 (42,929) (37,956) -11.6% 141.1% Net Income (Loss) 68,302 (125,466) (66,295) (12,053) 383,966 180,152 (144,014) (15,247) -89.4% -77.0% Numbers may differ from the previous publishing due to rounding 30
  • 32. TIM PARTICIPAÇÕES S.A. | Investor Relations “Safe Harbor” statements Statements in this presentation, as well as oral statements made by the management of TIM Participações S.A. (the “Company”, or “TIM”), 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. Investor Relations Visit our Website Avenida das Américas, 3434 - Bloco 01 http://www.tim.com.br/ri 6° andar – Barra da Tijuca 22640-102 Rio de Janeiro, RJ Phone: +55 21 4009-3742 / 4009-3446 / 4009-4017 Fax: +55 21 4009-3990 31
  • 33. TIM PARTICIPAÇÕES S.A. | Investor Relations 32