3. 2Q07: TIM Continues to Deliver Market Leading Results
Customer Quality
Continuous Value Segment Growth Recognized TIM Brand
Improving client mix: postpaid lines reach 22.0%
Preferred mobile operator in Brazil
on total (+1.4pp YoY).
Leader in average client satisfaction
29.0% of Market Share in postpaid
Reinforcing our leadership in business segment Largest voice & data coverage
Confirming our leadership in net service
revenue
Innovation Profitability
Focusing on Customer’s Total Solid Financial Growth
Communication Needs Continuous net service revenue growth
TIM Web: internet access solution Steady VAS gross revenue increase
TIM Mais Completo: convergent solution ARPU Growth QoQ
(mobile + fixed + internet) Further SAC reduction
Continous VAS innovation Solid YoY & QoQ EBITDA margin expansion
Positive net income
Overall growth prospects remaining strong
3
5. Continued Focus on Value Market
Combining Growth with an Improved Mix
Market Lines (Mln) and Penetration Rate TIM Lines Evolution (Mln)
Lines Lines
Growth Growth
YoY YoY
54.2% 56.4%
51.2% 53.2% +7.2 p.p. 27.5
49.2% 25.4 26.3
102.2 106.7 24.1 +23.0%
95.9 99.9 22.3
91.8 +16.2%
+16.9% 20.5% 21.3% 21.6% 22.0% +31.5%
19.5% 19.3% 19.4% 19.6% 19.6% 20.6%
2Q06 3Q06 4Q06 1Q07 2Q07 2Q06 3Q06 4Q06 1Q07 2Q07
Postpaid mix Penetration Rate Postpaid mix
Speeding up market growth lead by GSM Attracting the best customer mix:
dominant technology
TIM: 22.0% of postpaid (+1.4 p.p. YoY)
Increased penetration concentrated in lower
Competitors: 18.7% of postpaid (-0.4 p.p. YoY)
income classes
Source: ANATEL and company´s data. 5
6. Higher Share on Value Market
Selective Customers Acquisition
Market Share Performance 2Q07 Segmented Approach
TIM Share & Positioning VOLUME
-6.8 pp -2.6 pp Total lines 25.8% 2nd PLAYER
-6.2 mln lines -2.8 mln lines Postpaid lines 29.0% LEADERSHIP*
First 31.1% Net service >30% LEADERSHIP**
Player 29.1% revenue VALUE
28.4%
Market Share per Segment 2Q07 Mkt Share of Net Adds
25.4% 25.8% 29.0%
24.3% Post Total 26.0%
23.9% 24.6% +3.3p.p.
22.8%
Third
+1.5 pp +1.2 pp 25.7%
Player +1.0p.p. 25.0% 41.5%
+1.4 mln lines +1.2 mln lines Pre 22.2%
24.0%
2Q06 2Q07 Prepaid Postpaid
2Q06 3Q06 4Q06 1Q07 2Q07
Higher share and growth on high-value
Continued focus on value and not on growth
customers:
“per se”
Postpaid mix of net additions in the 2Q07: TIM
Sound market share: 31.2% vs competitor's average of 15.5%
25.8% of market share (+1.5 pp Y-o-Y basis)
Leadership in net service revenue
Source: ANATEL / Company´s data / Competitors press release.
* Based on 1Q07 figures 6
** Based on 1Q07 figures and confirmed in 2Q07 results already released
8. Leveraging on Leading Brand Power
Confirming the Leadership in Customer Satisfaction
Average Satisfaction Index* TIM Brand is recognized as reliable and appealing,
8.69
representative of market values and dreams
8.09 8.06
Winner of all recent key independent surveys:
• TIM is the first operator choice
• Leader in average client satisfaction through the
call center
3rd Player 1st Player • Quality standard in the postpaid heavy user call
center service
Consumer Preference (%) **
Committed to constant improvement of brand
29
25 perception through creation of new customer
operations unit
17
1st Player 3rd Player
Sources: * Interscience - May/2007 8
** Instituto Synovate - May/2007
9. Consumer: A Valuable Marketing Strategy
Pushing Usage through Promotion and Total Communication Service
Focus on “On-Net Traffic”
R$ 0.07 per minute for local on-net and DDI* calls
Mothers &
* Limited to 20 min/month to specific countries (US / Italy / etc)
Valentines’ Day
Facing competitors aggressiveness trough continuous offer improvement
Working on community concept in order to increase usage
Lowering SAC & Stimulating Usage
TIM Chip only TIM chip cost refund subject to recharge within 48 hours
& Recharge from activation
Incentives “Recarga Fácil” followed “Recarga Extra”, maintaining
bonus in minutes, according to recharge value
Focusing on Total Communication Needs
TM Mais Completo: Full communication package combining
“TIM Mais
Mobile Calls + Home Fixed Calls + Internet access
Completo” TIM Web: Internet access through USB Modem for Laptops and USB Modem
& “TIM Web” Desktops GPRS / EDGE
Fixed license acquisition: to enrich TIM convergent services offers Attracting fixed and data revenue while
safeguarding mobile leadershíp
Segmenting TIM Casa Offer
New TIM Casa
New TIM Casa prepaid: More attractive monthly fee, R$9,90 for
Prepaid 50 minutes - Boosting sales.
9
10. Integrated Business Solutions
Cross-selling of Voice and Data Service
Complete solution for corporate portfolio: meeting the specific
needs of companies with nationwide presence
Consolidate Mobile office: the widest BlackBerry and Smartphones handset
Positioning in portfolio
Business
Segment Homezone for corporate segment: TIM Casa Empresarial
Over 1,000 municipalities with EDGE
Data-only offer, leveraging on the widest data network in the 100% GPRS network coverage
country : Nosso Link
10
11. Continuous VAS Innovation
Stimulating Data Usage
Data Package Cross-selling
TIM DATA PACKAGE
Innovative Internet access Portfolio Data Plug ins
Offer / Bundle includes 1 GB, 250 MB or 40 MB
Flexibility and Valid for all TIM Postpaid (Corporate and Consumer)
Convenience
Data Usage Incentives
MEGA TIM WAP: 40MB Bundle through Wap Fast
MEGA TIM Mensagens: SMS+MMS Bundle Cards
Push on Media Content, Interactivity and Connectivity
M-Commerce TIM Music Store Games TIM Studio VAS
Stimulation
Gol airlines m-service Music content Free Demo Games User Generated (user&usage)
Tickets and Check-in download Promotional Content SMS Promotions
Games for R$3,99
Cristo Redentor
Quiz
Torpedo Surpresa
Retail promotion
(Mellita, Extra e
Prestobarba Gillete)
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12. Further Segmentation in Subscriber Acquisition Cost
SAC Performance
R$
168 -33% Lowering SAC despite better level of customer
and handset mix:
113 24.6% YoY growth in postpaid gross adds
increasing % of mid-range and high-end handsets
58% Commission sold
Subsidy
70% Anatel’s fee on Reduced subsidy strategy with focus on “TIM
net adds Chip Only” offer:
More than 70% of overall gross adds in 2Q07 vs.
42% Comodato ~40% in 2Q06
30% Advertising
Others Postpaid SAC oriented to maintain the
2Q06 2Q07 competitiveness and high-value customers
Direct cost Indirect cost acquisition
Improved pay-back period:
3.3 months in 2Q07 vs 4.7* months in 2Q06
* Proforma: Bill & Keep elimination starting on January 1st of 2006. 12
14. Solid Net Service Revenues
Total Net Revenue Growth
YoY Growth
R$ Mln
Reported Organic* Continuous service revenue growth:
3,060 Total traffic + 43% YoY: focus on
+34.5% +17.3%
2,275 on-net call promotion, stimulating usage
91% Customer growth +23% YoY
87% +40.5% +20.2%
Handset revenues confirm the trend of the
-5.8%
previous quarters reflecting strong push on
13% 9% ‘TIM Chip Only’ sales
2Q06 2Q07
Net Service Revenue Net Handsets Revenue
MOU / ARPU Performance
MOU increase driven by on-net traffic ARPU increase QoQ
R$
Min +16%
+0.7%
81 94
34.4 34.6
2Q06 2Q07 1Q07 2Q07
Increasing usage Keeping ARPU above the market
* Proforma: Adjusted by Bill & Keep elimination starting on January 1st of 2006.
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15. Delivering Profitable Growth
EBITDA and Margin EBITDA Expansion
R$ Mln
Bad Debt (as % of net services revenue)
6.0%
5.7% Improving Y-o-Y
0.7%
performance
5.3% excluding impact
of LD41 from non
TIM customers
(R$22 mln)
(457.5) 2Q06 2Q07
801.8
(53.8) 9.9 0.0
(55.3)
(17.0)
Main drivers: 743,7
- Gross Adds: +26%
515.7 - Recharges: +32%
2Q06 Handsets Service Network Selling Bad
COGS
Others 2Q07
EBITDA Revenue Revenue Expenses Expenses Debt Expenses** EBITDA
Change % YoY -5.8% +40.5% +103.5% +9.5% +48.9% -2.6% +0.0% +44.2%
+20.2%* +9.9%*
EBITDA Margin 19.8%* +4.5pp YoY, +228 mln on comparable basis 24.3%
Improved Margin QoQ despite negative seasonality
* Proforma: Bill & Keep elimination starting on January 1st of 2006. 15
** Others Expenses includes: G&A, Personnel and Net Other Operating Expenses/Revenues
16. From EBITDA to Bottom Line
YoY
(R$ mln) +228.0 (16.0) +212.0 (10.7) +71.3 +272.6
R$ Mln + R$39.3 Mln excluding
non recurring items:
2Q07: R$ 19.8 Mln*
2Q06: R$ 30.2 Mln**
743.7 (570.0) R$43.1 Million (Subsidiary income taxes)
R$12.6 Million (amortization of goodwill from
privatization, non-cash item)
R$ 2.5 Million (others non-operational expenses)
Positive Bottom
Line
(81.5)
173.7
(58.2) 34.0
EBITDA Depreciation EBIT Net Taxes and Net Income
2Q07 Amortization Financial Others
Expenses
* 2Q06: Recovery of` PIS/COFIN taxes credit (positive effect). 16
** 2Q07: Monetary restatement of contingencies (negative effect).
17. Net Financial Position
Net Debt QoQ Trend Net Cash Flow (OpFCF + Non OpFCF)
R$ Mln Non R$ Mln Seasonal Impact (R$781 Mln)
OpFCF OpFCF
1Q07 2Q07
341 390
Annual
Fistel Net Cash
440 Flow
Pro-forma
(391)
(1,582) 165
Reported Paid
(556) (1,973) 2Q07 Dividends
EBITDA +744
CAPEX (324)
Oper. WC (255) Of which
Dividends (440)
Positive Net Cash Flow (+R$390 Mln) excluding
Positive Operating FCF due to increased profitability seasonal disbursement
Gross Debt: R$2.3 billion (of which 89% long term / average annual cost of 11.66% p.y. in 2Q07)
Cash and equivalents: R$0.3 billion
Net Debt: R$2.0 billion
17
18. “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
Avenida das Américas, 3434 - Bloco 01
6° andar – Barra da Tijuca Visit our Website:
22640-102 Rio de Janeiro, RJ http://www.timpartri.com.br
Phone: +55 21 4009-3742 / 4009-3751 / 4009-3446 / 8113-0571
Fax: + 55 41 4009-3314
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