3 Q11 Brazil Mobile Operator Forecast Executive Summary

3Q.2011 Brazil Mobile Operator ForecastBrazil to have 288 million mobile subscriber connections in 2015 with Vivo taking 24.5% market share

October 2011

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© 2011 IE Market Research Corp.All rights reserved.

Source: IEMR

INDUSTRY AVERAGE SUBSCRIBER GROWTH IN THE BRAZILIAN WIRELESS MARKET IS ABOUT 18%

Double-digit subscriber growth continues in Brazil. The operator-wide average subscriber growth (YoY) was 17.6% in 2Q.2011, up from 16.3% in 2Q.2010.

Vivo Participacoes saw its subscriber growth (YoY) decrease from 19.6% in 2Q.2010 to 14.4% in 2Q.2011.

TIM Participacoes’s subscriber growth rose from 17.4% in 2Q.2010 to 25.0% in 2Q.2011.

Claro (America Movil)’s subscriber growth rose from 15.9% in 2Q.2010 to 18.4% in 2Q.2011, and Tele Norte Leste Participacoes (Oi)'s subscriber growth increased from 9.9% in 2Q.2010 to 11.5% in 2Q.2011.

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Vivo Participacoes SA TIM Participacoes SA Claro S.A. (America Movil S.A.B. DE C.V.) Tele Norte Leste Participacoes (Oi)Industry Total

Chart 1: Subscriber Growth (4Q08 – 2Q11), %

Strong subscriber growth continues in Brazil17.6% industry average subscriber growth in 2Q.2011

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Source: IEMR

INDUSTRY AVERAGE ARPU IN BRAZIL CONTINUES TO DECLINE

The industry average monthly ARPU was US$ 14.38 in 2Q.2011, down -5.6% YoY.

TIM and Claro continue to increase their ARPUs. Claro’s monthly ARPU was US$ 10.66 in 2Q.2011, down -10.5% YoY.

Tele Norte Leste’s monthly ARPU was US$ 13.55 in 2Q.2011, down -3.6% YoY.

Nextel’s ARPU level remains the highest among the operators, and its ARPU growth (YoY) in 2Q.2011 was also high at 12.5%.

Chart 2: ARPU Growth (4Q08 – 2Q11), %

ARPU growth in Brazil remains negative-5.6% industry average ARPU growth in 2Q.2011

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Vivo Participacoes SA TIM Participacoes SA Claro S.A. (America Movil S.A.B. DE C.V.) Tele Norte Leste Participacoes (Oi)Industry Total

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Source: IEMR

The operator-wide average Minute of Use (MOU) per subscriber was 104 minutes per month in 2Q.2011, down -2.2% YoY.

MOU per subscriber at Vivo, TIM and Claro was 117 minutes, 110 minutes, and 84 minutes respectively in 2Q.2011.

MOU/Sub growth is decreasing at all of Vivo, TIM and Claro. Claro had the lowest MOU/Sub growth (YoY) at -9.7% in 2Q.2011, down from 27.4% in 2Q.2010

Vivo had the highest MOU/Sub growth at 2.6% in 2Q.2011 (down from 42.5% in 2Q.2010).

Chart 3: MOU/Sub Growth (4Q08 – 2Q11), %

Minutes of Use per Subscriber is decreasingIndustry average MOU/Sub is approximately 104 minutes per month

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Vivo Participacoes SA TIM Participacoes SA

Claro S.A. (America Movil S.A.B. DE C.V.) Industry Total

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Source: IEMR

12.6% INDUSTRY-AVERAGE EBITDA GROWTH IN 2Q.2011

The industry average EBITDA growth rate (YoY) in 2Q.2011 was 12.6%, down from 24.6% in 2Q.2010.

EBITDA growth rate at Vivo rose from 10.6% in 2Q.2010 to 20.9% in 2Q.2011.

EBITDA growth rate (YoY) at TIM declined from 16.9% in 2Q.2010 to 12.7% in 2Q.2011.

EBITDA growth rate at Claro increased to 4.9% in 2Q.2011, up from 1.3% in 2Q.2010. On the other hand, EBITDA growth rate (YoY) at Tele Norte Leste declined to -6.7% in 2Q.2011.

Chart 4: EBITDA Growth (4Q08 – 2Q11), %

EBITDA growth in Brazil remains positive12.6% industry average EBITDA growth in 2Q.2011

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Vivo Participacoes SA TIM Participacoes SA Claro S.A. (America Movil S.A.B. DE C.V.) Tele Norte Leste Participacoes (Oi)Industry Tatal

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Source: IEMR

We forecast that the number of total wireless subscriber connections in Brazil will increase from 203.2 million in the end of 2010 to 288 million in the end of 2015.

Given the latest quarter numbers, our model predicts that Vivo will have approximately 78.7 million mobile subscriber connections in 2015.

We expect that TIM will have 71.8 million wireless subscribers in 2015 (24.9% market share).

In our view, Claro will have 70.5 million mobile subscribers in Brazil with a 24.5% market share in 2015.

We expect that Tele Norte Leste will have 59.4 million mobile subscribers in Brazil with a 20.6% market share in 2015.

Chart 5: Subscribers by operator (CY09 – CY15F)

So what is IEMR’s Forecast? Total mobile subscriber connections in Brazil to reach 288 million in 2015

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Vivo Participacoes SA TIM Participacoes SA Claro S.A. (America Movil S.A.B. DE C.V.)Tele Norte Leste Participacoes (Oi)

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Source: IEMR

WE EXPECT THE OPERATOR-WIDE AVERAGE ARPU LEVEL TO CONTINUE DECREASING OVER THE NEXT TWO YEARS

Our forecasting model predicts that monthly ARPU levels in Brazil will be decreasing over the forecast period.

According to our model, the industry average ARPU will be approximately BRL 23 per month in 2013.

We expect that Vivo’s ARPU level will continue to be higher than those of TIM, Claro and Tele Norte Leste over the next two years. We expect that Vivo’s monthly ARPU will be about BRL 24 in 2013.

Chart 6: Average Revenue per User (ARPU) per month (CY09 – CY13F), BRL

So what is IEMR’s Forecast?Industry average ARPU in Brazil will be decreasing

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Vivo Participacoes SA TIM Participacoes SA Claro S.A. (America Movil S.A.B. DE C.V.)Tele Norte Leste Participacoes (Oi)Average

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Source: IEMR

WE EXPECT TIM TO ENJOY THE HIGHEST EBITDA MARGIN OVER THE NEXT TWO YEARS

Our model is predicting that, from 2012 to 2013, Vivo’s EBITDA margin will be higher than those of TIM, Claro and Tele Norte Leste.

We forecast that TIM's EBITDA margin (calculated as EBITDA/service revenue) will increase from 31% in 2010 to 34.3% in 2013.

We expect that Claro’s EBITDA margin will be about 27% in 2013.

In our view, Tele Norte Leste’sEBITDA margin will also be approximately 27% in 2013.

Chart 7: EBITDA margins (CY09 – CY13F), %

So what is IEMR’s Forecast? TIM to enjoy the highest profitability over the next two years

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Vivo Participacoes SA TIM Participacoes SA Claro S.A. (America Movil S.A.B. DE C.V.)Tele Norte Leste Participacoes (Oi)Average

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3 Q11 Brazil Mobile Operator Forecast Executive Summary