Vivo Participações reported its 3Q06 results, with key highlights including: - Over 90% of customers migrated to new IT/IS platforms, finalizing unification projects. - Combating cloning and fraud reduced occurrences by 84% year-over-year. - Second stage of corporate reorganization nearing completion to merge 14 operators into one. - Total revenues grew 13% over previous quarter due to ending partial interconnection agreements.

1. Vivo Participações – 3Q06 Results
October 27, 2006
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2. Executive Summary
More than 90.0% of our customers are already inserted in the new IT/IS platform, which attests
that the unification projects is now entering in the final stage and have been successful.
Sustainable combat against cloning and fraud, with certification of network and prepaid and
post-paid customer base, provided approximately 84% reduction in the number of cloning
occurrences in comparison to the same period the last year;
Second stage of the Corporate Reorganization about to be concluded and which will cause 14
operators to be merged into one only company, with consequent simplification of structures
and processes and allowing operating and control efficiency.
VIVO is a leader in compliance of ANATEL’s quality goals, having achieved 96.7% of the pre-
established goals.
VIVO has the best channels of distribution of the Brazilian telecom sector with 8,364 points of
sales, being 319 own stores, 3,175 third party stores and 4,718 retails stores.
Higher coverage – 2,272 municipalities against 1,757 from competitor 1 and 1,694 from
competitor 2.
Total net revenue grew 13.0% in relation to the previous quarter. Termination of the partial
Bill&Keep system in July contributed to such increase.
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3. Executive Summary
The losses recorded in 3Q06 were 60.1% lower than the previous quarter (from R$ 493.1
million to R$ 196.9 million)
EBITDA of R$715.6 million, with Ebitda margin of 25.3% in the quarter, represented a
significant growth in relation to R$306.3 million and 11.8% Ebitda margin recorded in 2Q06.
Positive reversal of the operating cash flow in 3Q06 over the previous quarter represented
a consequence of improvement in the EBITDA. The amount of R$270.8 million recorded in
the quarter increases the year-to-date operating cash flow to R$675.0 million.
The net indebtedness in the amount of R$4,147.6 millions presents a 4.3% reduction in the
quarter in relation to the 2Q06 due to the benefit of the first stage of the corporate
restructuring.
Increase of 18.3% of the post-paid ARPU and 21.7% in the pre-paid ARPU when compared
to the 2Q06.
SAC was reduced by 31.4% and 18% in relation to 3Q056 and 2Q06, respectively.
GSM – coverage and overlay have been fulfilled as planed.
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4. Client Base
- 0.4% + 0.7%
28,840 28,726 28,525
-7.2% - 0.5%
5,650 5,244 5,268
+1.3%
+ 1.0%
23,190 23,482 23,257
3Q05 3Q06 2Q06
Pre Post
Market leadership in its authorized area;
Stable mix of clients;
Loyalty and retention;
Maintenance of the entry level handset prices.
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5. Leadership in Distribution & Coverage
Only operator in 3G
Distribution Channels Covered Municipalities
8,364 2,272
319 6,953
6,116 1,757
97 1,694
89
3,175
2,500
1,954
4,718 4,386 4,011
Vivo C1 C2 Vivo C1 C2
Retail Third Party Own Stores
87% of clients covered by 1xRTT
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6. 3Q06 Main Marketing Actions
Inbound Traffic Vivo ZAP 3G
Upon receiving calls win
bonus for local calls from
Vivo to Vivo
Vivo ZAP 3G: Promotional prices
Father’s Day Talk more: Vivo-Prepaid
Buy any handset and win
up to R$1,000 every month, Client speaks for free to
till the end of the year any Vivo or fixed phone
after 3 minutes of
connection
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7. Loyalty and Retention
Postpaid Clients Prepaid Clients
Program based on Points Implementation of new values to
Change of non-authenticated recharge
handsets and/or of obsolete technology Incentives to recharge
Right Planning Bonus in minutes
Client Bring-back Program More options in points to recharge
Special Care Program
Accomplishment of Campaigns
+52%
+20%
3Q05 2Q06 3Q06
Number of binded clients
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8. Net Revenues
R$ million
Service Revenues Handset Revenue
+ 2.3% + 13.0%
2,412 2,468
+ 261 2,184
-10.3% -13.8%
992 1,150
868
+ 1%
1,285 1,182 1,159
- 8%
398 357 414
136 136 157
3Q05 3Q06 2Q06 3Q05 3Q06 2Q06
Other Services Monthly Subscription
Handsets
Network Usage Bill & Keep effect and others
Bill & Keep effect and others (R$ 261 MM);
Campaigns to stimulate recharges
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9. Data Revenues Evolution
Data Net Revenues
3Q06
- 4.5%
2Q06 +8.5%
3Q05
3Q05 3Q06
15%
22%
23% 54%
62%
24%
SMS WAP ZAP + others SMS WAP ZAP + others
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10. ARPU Blended Evolution
3Q05 vs. 3Q06 3Q06 vs. 2Q06
+1.8% +19.1%
28.2 28.7
3.1
24.1
11.5 13,4
9.7
16.7
15.3 14.4
3Q05 3Q06 2Q06
Inbound
Outgoing Bill & Keep effect and others
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11. Post-Paid ARPU Evolution
3Q05 vs. 3Q06 3Q06 vs. 2Q06
+ 1.1% + 18.3%
83.0 83.9
28.8
70.9
23.9
20.8
59.0
55.1
50.1
3Q05 3Q06 2Q06
Inbound
Outgoing
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12. Pre-Paid ARPU Evolution
3Q05 vs. 3Q06 3Q06 vs. 2Q06
11.3% 22.7%
15.7
14.1
12.8
9.6
8.1
6.8
6.0 6.1 6.0
3Q05 3Q06 2Q06
Inbound
Outgoing
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13. MOU Blended Evolution
3Q05 vs. 3Q06 3Q06 vs. 2Q06
+ 2.6% +18.2%
76 78
66
40
38
35
40
+11.1% +29.0%
36
31
3Q05 3Q06 2Q06
Inbound
Outgoing
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14. SAC*
-31.4% -18.0%
153
128
105
3Q05 3Q06 2Q06
*SAC Blended
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15. Operating Costs*
R$ million
Cost of 372
services 418
rendered 390 664
149 274
Personnel 155
151
557 3Q05
Cost of
547 2Q06
handsets
512 3Q06
Bill & Keep effect
768
Selling
1002
expenses
697
General & 159
administrative 146
expenses 113
*Depreciation is not included
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16. PDD* Evolution
R$ million 9.0%
4.1%
3.7%
338.7
161.3
147.8
3Q05 2Q06 3Q06
PDD % Gross Revenues
Control of cloning and fraud with reduction of approximately 84%;
Management of the credit risk involved in the capture of new clients;
Increased number of actions to improve collection;
Authentication of client base.
* PDD = Provision for Bad Debt
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17. EBITDA & Free Cash Flow
R$ million
EBITDA Free Cash Flow*
28.4%
28.3%
25.3%
11.8%
796.6
715.6 728.4
406.8
270.8
306.3
-31.6
3Q05 3Q06 2Q06
3Q05 3Q06 2Q06
EBITDA Adjusted EBITDA
EBITDA Margin Adjusted EBITDA Margin * EBITDA - Capex
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18. Gross Debt, Net Debt and Gearing
Covered Short-Term Debt
Gross Debt (R$ million) Net Debt (R$ million)
4,686.4 4,699.6 4,334.0
4,147.6
60% 68%
40% 32%
2Q06 3Q06 2Q06 3Q06
Short-Term Long-Term
Gearing
R$ million 7,928 7,733
4,334 0.55 0.54
4,148
Net Debt
Shareholder's Equity 2Q06 3Q06
2Q06 3Q06
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19. Net Financial Result
Reduction in Financial Expenses
R$ million
-5.2% -5.6%
(213.6)
(212.7)
(201.6)
3Q05 3Q06 2Q06
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20. Capex
R$ million
444.8 1,344.0
389.8 1,064.0
Total Capex 337.9 135.1 294.1
94.0
191.4
110.8 349.1
71.2 107.1
87.6 280.6
858.5
224.6 202.6
139.5 434.3
3Q05 2Q06 3Q06 Accumulated 2005 Accumulated 2006
Network Technology Others Network Technology Others
% Capex/Net Rev. 15.7% 16.3%
13.3%
13.9%
13.0%
3Q05 2Q06 3Q06 Accumulated 2005 Accumulated 2006
Main Capex Targets: IT / IS Programs;
Quality and Coverage;
Corporate Market Segment.
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21. ANATEL Standards
Improvement in Indicators
12.1%
9.3%
3.8%
3.3% 3.3%
Best
Performance
Sep-05 Dec-05 Mar-06 Jun-06 Sep-06
Source: ANATEL (September/2006)
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22. Vivo Social Responsibility
Vivo is one of the first companies to adhere to the “Everyone
Committed to Education” program, a nationwide mobilization to the
benefit of improvement of public education quality in Brazil..
Four months after its opening, the Portuguese Language Museum,
sponsored by Vivo, was awarded UNESCO’s recognition diploma
due to its contribution in Communication and Information..
ACTIONS Vivo Institute, in a partnership with the City of São Paulo
Government, has launched the Reading to Believing project, which
will allow visually deficient people to have access to education and to
reading.
The Environmental Education School – Park School, a project
sponsored since 2004 by Vivo Institute, won the 2006 Telecom
Yearbook Citizenship Prize.
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23. GSM Overlay
More handset models available.
Competitiveness National coverage in digital roaming.
Lower risk of cloning.
Overlay in 850 MHz results in:
Coverage Superposition of coverage areas;
Good indoor coverage.
Overlay Availability of GSM in parallel to CDMA.
Commitment to maintain the same levels of quality in CDMA and GSM.
Quality
PT and TEF expertise in GSM.
Opex off-set by reduced costs in other items.
Technology
More choices in providing communication solutions.
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24. Final Remarks
Main Strategic Points
Cloning and Fraud Permanent combat and progressive
reduction
IT / IS Platforms Unification
Corporate Restructuring Final stage toward conclusion
Coverage Quality Assured
National Coverage • Digital Roaming (hybrid handsets)
• 1.9 MHz Frequency
Price of Handsets and Services New Campaigns
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25. Safe Harbor Clause
Forward Looking Statements
• This presentation contains statements that constitute forward looking
statements in its general meaning and within the meaning of the Private
Securities Litigation Reform Act of 1995. These statements appear in a number
of places in this document and include statements regarding the intent, belief or
current expectations of the customer base, estimates regarding future growth in
the different business lines, market share, financial results and other aspects of
the activity and situation relating to the Company. The forward looking
statements in this document can be identified, in some instances, by the use of
words such as "expects", "anticipates", "intends", "believes", and similar
language or the negative thereof or by forward-looking nature of discussions of
strategy, plans or intentions. Such forward-looking statements are not
guarantees of future performance and involve risks and uncertainties and
actual results may differ materially from those in the forward looking statements
as a result of various factors.
• Analysts and investors are cautioned not to place undue reliance on those
forward looking statements which speak only as of the date of this presentation.
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