TNE Tele Norte Leste Participacoes S.A. Common Stock

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 6-K

 

 

Report of Foreign Private Issuer Pursuant to Rule 13a-16 or

15d-16 of the Securities Exchange Act of 1934

For the month of June 30, 2010

Commission File Number: 001-14487

 

 

TELE NORTE LESTE PARTICIPAÇÕES S.A.

(Exact Name as Specified in its Charter)

Tele Norte Leste Holding Company

(Translation of registrant’s name into English)

 

 

Rua Humberto de Campos, 425 – 8 ^o andar

Rio de Janeiro, RJ

Federative Republic of Brazil

(Address of principal executive offices)

 

 

(Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.)

Form 20-F:      x         Form 40-F:     ¨

(Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1)):

Yes :       ¨          No :     x

(Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7)):

Yes :      ¨          No :     x

(Indicate by check mark whether the registrant by furnishing the information contained in this Form, the Registrant is also thereby

furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.)

Yes :      ¨          No :     x

If “Yes” is marked, indicate below the file number assigned to the

registrant in connection with Rule 12g3-2(b):             

 

 

 

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		Investor		2Q10
		Relations

Simples Assim

Press Release

Consolidated information and results

(unaudited)

This report contains the operational and financial data for Tele Norte Leste Participações and its

direct and indirect subsidiaries on

the SECOND quarter of 2010

TELE NORTE LESTE PARTICIPAÇÕES S.A.

www.oi.com.br/ir

 

 

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U PCOMING E VENTS : C ONFERENCE C ALLS

 

P ORTUGUESE				E NGLISH
DATE:		Friday, July 30, 2010   10:00am (Rio) - 9:00am (NY)		DATE:		Friday, July 30, 2010   11:30am (Rio) - 10:30am (NY)
ACCESS:		Phone: (55 11) 4688-6361   Code: Oi   Replay: (55 11) 4688-6312   Available until August 5,2010   Code: 47129		ACCESS:		Phone: 800-860-2442 (U.S.)        1 412-858-4600 (Brazil / other countries)   Code: Oi   Replay: 877-344-7529 (U.S.)       1 412 317 0088 (Brazil / other countries)   Available until August 9, 2010 (code 442172 #) dial 1 to start
WEBCAST:		Click here		WEBCAST:		Click here

 

A complementary presentation will be available before the start of the conference call at http://www.oi.com.br/ir

C ONTENTS

 

1		H IGHLIGHTS		2
2		O PERATING P ERFORMANCE		3
3		C ONSOLIDATED R ESULTS		5
4		D EBT AND C APITAL E XPENDITURE		13
5		A DDITIONAL I NFORMATION		16
6		F INANCIAL S TATEMENTS		20

 

Tele Norte Leste Participações   Outstanding shares (‘000): 382.632 TNLP3: R$37.70 (127,591 thousand shares) TNLP4: R$27.00 (255,041 thousand shares) TNE: US$14.96 ADR Market Capitalization (Million): R$11,696, US$6,493		Telemar Norte Leste   Outstanding shares (‘000): 238.391 TMAR3: R$60.01 (107,063 thousand shares) TMAR5: R$49.00 (130,264 thousand shares) TMAR6: R$45.55 (1,064 thousand shares) Market Capitalization (Million): R$12,856 US$7,136
Brasil Telecom   Outstanding shares (‘000): 589.789 BRTO3: R$16.00 (203,423 thousand shares) BRTO4: R$12.14 (386,366 thousand shares) BTM: US$20.08 PN ADR / US$8.65 ON ADR Market Capitalization (Million): R$7,945 US$4,410

Notes: (1) Prices at the end of the 2nd Quarter of 2010; (2) Outstanding ex-treasury shares; (3) Market Value based on unadjusted shares.

 

 

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Rio de Janeiro, July 29, 2010: Tele Norte Leste Participações S.A. (Bovespa: TNLP4 and TNLP3), Telemar Norte Leste S.A. (Bovespa: TMAR3, TMAR5 and TMAR6) and Brasil Telecom S.A. (Bovespa: BRTO3 and BRTO4) are pleased to announce their results for the second quarter of 2010. This report contains the consolidated data of Tele Norte Leste Participações and its direct and indirect subsidiaries as of June 30, 2010.

1) H IGHLIGHTS

 

•

Revenue Generating Units (RGUs) totaled 62.6 million in June 2010, rising by approximately 310 thousand users in the quarter and 2.7 million users in 12 months. Oi Mobile remained the leading growth driver, followed by “Oi Velox” fixed broadband internet.

 

•

Oi Mobile had more than 37 million customers at the end of the period, with net additions numbering 613 thousand customers in the quarter and 3.3 million new users in 12 months. Region III (State of São Paulo) was responsible for 81% of new customers in the last 12 months.

 

•

In the broadband segment (fixed+mobile), additions amounted to 109 thousand new users, of which 70 thousand were in mobile 3G to end the period with 4.8 million users overall.

 

•

Consolidated Gross Revenue totaled R$11,568 million in 2Q10, rising 3.4% from 2Q09, underpinned by revenue from mobile services and data transmission.

 

•

ARPU for Oi Mobile equaled to R$22.4 in 2Q10, amounting to 2.8% growth in the quarter and 6.7% growth compared to 2Q09.

 

•

Consolidated EBITDA reached R$2,674 million in 2Q10 with a 36.2% margin, expanding 5.6% compared to the previous quarter and 9.2% based on recurring EBITDA in 2Q09. The cost-cutting benefits associated with the operational tie-up with Brasil Telecom are already evident. These are present in virtually every item, as well as the policy of leveraging profitability of the mobile base, without following its competitors in expanding the base at any cost.

 

•

Net Earnings reached R$444 million in 2Q10 (equivalent to R$1.160/share or US$0.6482/ADR), totaling R$940 million in the first half of 2010, up from a loss in 1H09. This performance was mainly attributed to a better operating results and the synergies.

 

•

Consolidated Net Debt fell by R$315 million in 2Q10, ending the quarter at R$20,955 million. Net Debt to Recurring EBITDA stood at 2.1 times in the last 12 months.

 

•

Cash Generation before capex reached R$1.7 billion, totaling R$4.1 billion in the first half of the year.

 

 

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Table 1 – Consolidated Financial Indicators

 

		Quarter															Half-Year
TNL Consolidated - R$ million		2Q09			1Q10			2Q10			QoQ			YoY			1H09			1H10			YoY
Net Revenue		7,302			7,462			7,394			-0.9	%		1.3	%		14,789			14,855			0.4	%
EBITDA		2,449			2,532			2,674			5.6	%		9.2	%		4,826			5,206			7.9	%
EBITDA Margin (%)		33.5	%		33.9	%		36.2	%		2.3	p.p.		2.7	p.p.		32.6	%		35.0	%		2.4	p.p.
Net Earnings		-146			496			444			-10.5	%		—			-135			940			—
Net Debt		21,638			21,270			20,955			-1.5	%		-3.2	%		21,638			20,955			-3.2	%
Available Cash		7,968			8,669			11,400			31.5	%		43.1	%		7,968			11,400			43.1	%
CAPEX		940			372			446			19.9	%		-52.6	%		1,845			818			-55.7	%
Net Debt / EBITDA		2.2			2.1			2.1			0.0	%		-4.5	%		2.2			2.1			-4.5	%
TMAR Consolidated - R$ million		2Q09			1Q10			2Q10			QoQ			YoY			1H09			1H10			YoY
Net Revenue		7,284			7,445			7,377			-0.9	%		1.3	%		14,754			14,823			0.5	%
EBITDA		2,459			2,543			2,685			5.6	%		9.2	%		4,848			5,228			7.8	%
EBITDA Margin (%)		33.8	%		34.1	%		36.4	%		2.3	p.p.		2.6	p.p.		32.9	%		35.3	%		2.4	p.p.
Net Earnings		-178			588			543			-7.7	%		—			-175			1,132			—
BRTO Consolidated - R$ million		2Q09			1Q10			2Q10			QoQ			YoY			1H09			1H10			YoY
Net Revenue		2,648			2,638			2,587			-1.9	%		-2.3	%		5,415			5,225			-3.5	%
EBITDA		1,033			867			796			-8.2	%		-22.9	%		1,951			1,663			-14.8	%
EBITDA Margin (%)		39.0	%		32.9	%		30.8	%		-2.1	p.p.		-8.2	p.p.		36.0	%		31.8	%		-4.2	p.p.
Net Earnings		-1,438			300			237			-21.0	%		—			-1,517			537			—

 

 

*	EBITDA and EBITDA Margin in 2Q09 are recurring.

2) C ONSOLIDATED O PERATING P ERFORMANCE :

Revenue Generating Units (RGUs) totaled 62.6 million in 2Q10, rising 4.6% in the past 12 months and 0.5% in the quarter. The expansion of the wireless base (including 3G), mainly in the prepaid segment, in addition to the increase in fixed broadband internet services (“Oi Velox”) led this performance.

Wireline – Oi Fixed

Fixed lines in service decreased in the quarter and year-over-year by 1.5% and 4.6%, respectively. In the year-over-year analysis, we must highlight the impact of the disconnections in Region II in 3Q09 as a result of customers disconnection from the old Pluri plans. The company has been carrying out actions to protect its base through bundles such as “Oi Conta Total” and alternative plans; however, the convergent product Oi Conta Total will begin to be sold in Region II in the third quarter, after the collection systems are ready and sales channels have been trained.

In 2Q10, alternative plans accounted for 63.8% of all fixed lines in service, reaching 13.3 million users

 

 

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Broadband – fixed + mobile

The user base for the fixed broadband service totaled 4,307 thousand, 1.0% and 5.9% higher than those in 1Q10 and 2Q09, respectively, accounting for 20.5% of all fixed lines in service in the quarter (20.0% in 1Q10).

Including mini-modem users and mobile data plans, the 3G mobile broadband service reached 556 thousand customers in 2Q10 (of which 474 thousand were mini modem; and 82 thousand were mobile phone), having added 68 thousand customers this quarter and 229 thousand since 2Q09.

The total net addition of broadband clients, including fixed and mobile users, equaled 109 thousand from 2Q10 and 470 thousand in 12 months, increasing 2.3% from 1Q10 and 10.7% from 2Q09.

Wireless – Oi Mobile

With 613 thousand net additions since 1Q10 and 3,294 thousand since 2Q09, the mobile customer base reached 37,226 thousand in 2Q10. Region III (São Paulo) was once again responsible for 92% of all new clients in the quarter.

Customers in the wireless segment made up 59.5% of all revenue generating units.

“Oi Controle” already had 1,698 thousand users at the end of 2Q10, having grown 12.0% and 23.9% in the quarter and year-over-year, respectively. Oi has encouraged some post-paid customers to migrate to this plan, which is more adequate for their consumption profile.

It must be noted that this plan has post-paid features due to its recurring revenue, provided that the customer does not receive a bill, but authorizes a monthly debit on their credit card.

The prepaid user base, which represents 83% of the total base, reached 31,015 thousand in 2Q10, having expanded 1.2% in the quarter and 8.7% compared with 2Q09.

With 4,514 thousand users, the post-paid client base rose by 1.7% from 1Q10 and 12.3% compared with 2Q09.

The “Oi Conta Total” plan totaled 1,421 thousand customers, growing 0.9% compared with 2Q09, equaling 38.7% of the post-paid base in Region I, the area where the product is available at the moment. Following the launch of “Oi Conta Total” in Region II, slated for September 2010, Oi expects to again boost growth for the “Oi Conta Total” plans.

Video – Oi TV

The Pay TV service through DTH technology was expanded during May 2010 to three new areas (Bahia, Sergipe and Espirito Santo), totaling eight states where the product is available.

The company cleaned the customer base, reducing the final base by 18 thousand clients compared with 1Q10. Since the product was launched, the company has been working on improving its operational procedures to make the product more profitable. The company reinforcedthe importance of offering DTH services to make its wireline customer base loyal to Oi. Therefore, it has sought more sales efforts, directing the product’s offer to Oi’s fixed clients with a satisfactory credit profile.

 

 

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Table 2 – Consolidated Operational Indicators

 

		2Q09			1Q10			2Q10			QoQ			YoY
Wireline Services - “Oi Fixo”
(a) Lines in Service (‘000)		21,753			21,085			20,759			-1.5	%		-4.6	%
Residential		15,459			15,025			14,778			-1.6	%		-4.4	%
Commercial		5,442			5,211			5,131			-1.5	%		-5.7	%
Public Telephones		852			850			849			-0.1	%		-0.4	%
Alternatives Plans (‘000)*		11,332			13,284			13,252			-0.2	%		16.9	%
Proportion of Lines in Service (%)		52.1	%		63.0	%		63.8	%		0.8	p.p.		11.7	p.p.
ARPU Fixed (R$)		57.3			55.5			55.2			-0.5	%		-3.7	%
Fixed Broadband Services - “Oi Velox”
(b) Fixed Broadband Subscribers (‘000)		4,066			4,266			4,307			1.0	%		5.9	%
Proportion of Lines in Service (%)		18.5	%		20.0	%		20.5	%		0.5	p.p.		2.0	p.p.
ARPU Fixed Broadband (R$)		43.1			42.1			42.6			1.2	%		-1.2	%
Wireless Services - “Oi Móvel”
(c) Mobile Subscribers (‘000)		33,932			36,613			37,226			1.7	%		9.7	%
Pre-Paid Plans		28,540			30,660			31,015			1.2	%		8.7	%
Post-Paid Plans		4,020			4,437			4,514			1.7	%		12.3	%
Oi Control		1,371			1,516			1,698			12.0	%		23.9	%
Oi Conta Total (‘000)**		1,408			1,453			1,421			-2.2	%		0.9	%
3G Clients (‘000)		327			488			556			13.9	%		70.0	%
Market Share Oi (%) - Brazil		21.3	%		20.4	%		20.1	%		-0.3	p.p.		-1.2	p.p.
Proportion of Net Additions in Brazil (%)		35.3	%		9.7	%		10.2	%		0.5	p.p.		-25.1	p.p.
Monthly Churn rate (%)		3.5	%		3.3	%		3.4	%		0.1	p.p.		-0.1	p.p.
ARPU Mobile (R$)		21.0			21.8			22.4			2.8	%		6.7	%
Vídeo - “Oi TV ”
(d) Pay TV Subscribers (‘000) ***		62			283			265			-6.4	%		327.4	%
RGU - Revenue Generating Unit (a+b+c+d) (‘000)		59,813			62,247			62,557			0.5	%		4.6	%

 

*	Alternative plans include “Planos de Minutos,” “Plano Economia,” “Digitronco,” “PABX Virtual” and others.

**	Includes Oi Conta Total Professional

***	Includes users in DTH, launched in July 2009

3) C ONSOLIDATED F INANCIAL R ESULTS :

3.1) Revenue:

Consolidated gross revenue totaled R$11,568 million in 2Q10, expanding by 3.4% compared with 2Q09 and 0.2% from the previous quarter, totaling R$23.1 billion in the first half of 2010. Consolidated net revenue reached R$7,394 million in 2Q10, up by 1.3% compared with 2Q09 and stable compared with the previous quarter, proving that the company is managing to offset the drop in voice revenue in the fixed segment with the growth of mobile and broadband revenues. In the first six months of the year, net revenue totaled R$14.9 billion, slightly higher than the same period in 2009.

 

 

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Table 3 – Breakdown of Consolidated Gross Revenue

 

		Trimestral											Semestral							Composição %
R$ Milhões		2T09		1T10		2T10		D  Trim. (%)			D  Ano (%)		1S09		1S10		D  Ano (%)			1S09		1S10
Telefonia Fixa		8,763		8,842		8,674		-1.9			-1.0		17,690		17,516		-1.0			78.9		75.8
Local (ex - VC1)		3,278		3,244		3,229		-0.5			-1.5		6,567		6,473		-1.4			29.3		28.0
Fixo Móvel Local (VC1)		1,129		1,020		991		-2.8			-12.2		2,281		2,010		-11.9			10.2		8.7
Longa Distância FF + SMP		1,141		1,215		1,068		-12.1			-6.4		2,362		2,283		-3.3			10.5		9.9
Fixo Móvel (VC2/3)		349		335		309		-7.8			-11.5		728		644		-11.5			3.2		2.8
Uso da Rede		192		239		225		-5.9			17.2		422		464		10.0			1.9		2.0
Dados		2,114		2,277		2,362		3.7			11.7		4,193		4,639		10.6			18.7		20.1
Telefones Públicos		250		165		153		-7.3			-38.8		499		318		-36.3			2.2		1.4
Serviços Adicionais / Voz Avançada		310		347		336		-3.2			8.4		638		683		7.1			2.8		3.0
Telefonia Móvel		2,354		2,601		2,805		7.8			19.2		4,624		5,406		16.9			20.6		23.4
Serviços		2,254		2,545		2,741		7.7			21.6		4,434		5,286		19.2			19.8		22.9
Assinatura		542		609		660		8.4			21.8		1,076		1,268		17.8			4.8		5.5
Chamadas Originadas		885		948		1,020		7.6			15.3		1,748		1,968		12.6			7.8		8.5
Roaming		27		39		30		-23.1			11.1		62		69		11.3			0.3		0.3
Uso de Rede		566		611		631		3.3			11.5		1,082		1,242		14.8			4.8		5.4
Dados / Valor Adicionado		234		338		401		18.6			71.4		466		738		58.4			2.1		3.2
Revenda de Aparelhos		100		56		64		14.3			-36.0		190		121		-36.3			0.8		0.5
Outros serviços*		66		101		89		-11.9			34.8		112		190		69.6			0.5		0.8
Telefonia Fixa - Bruta		8,763		8,842		8,674		-1.9			-1.0		17,690		17,516		-1.0			78.9		75.8
Telefonia Móvel - Bruta		2,354		2,601		2,805		7.8			19.2		4,624		5,406		16.9			20.6		23.4
Outros serviços - Bruta		66		101		89		40.3			34.8		112		190		69.6	%		0.5		0.8
Receita Bruta Total		11,184		11,545		11,568		0.2			3.4		22,426		23,113		3.1			100.0		100.0
Receita Líquida Total		7,302		7,462		7,394		-0.9			1.3		14,789		14,855		0.4			100.0		100.0
Telefonia Fixa - Líquida		5,704		5,659		5,521		-2.4			-3.2		11,687		11,180		-4.3			79.0		75.3
Telefonia Móvel - Líquida		1,570		1,726		1,810		4.9			15.3		3,036		3,536		16.5			20.5		23.8
Outros serviços - Líquida		28		77		63		(18.2	)		125.0		66		139		110.6			0.4		0.9

 

*	Pay-TV and Oi Paggo

Wireline Services:

Gross revenue from fixed services fell 1.9% compared with 1Q10 and 1.0% compared with the year-ago period.

For another quarter, the positive highlight was the increase in revenue from data transmission services, which expanded 3.7% in the quarter and 11.7% from 2Q09. This item, combined with revenue from fixed network usage (which increased 17.2% from 2Q09), partially offset the reduction in wireline revenues seen in the past 12 months.

Local Service:

 

Fixed-to-Fixed Local (ex-vc1)(subscription, traffic, installation fees)		Revenue from fixed-to-fixed local service decreased 0.5% compared with 1Q10 due to smaller traffic and a lower base for fixed lines in service. Year-over-year, the reduction of the fixed line base hurt this account, besides lower smaller traffic. The soccer World Cup had an impact on this service’s revenue, especially on the days when the Brazilian squad played.

 

 

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Fixed-to-Mobile: (VC1)		Revenue from the local fixed-to-mobile service decreased 2.8% and 12.2% compared with 1Q10 and 2Q09, respectively. The greater subsidy for traffic (minute bonuses) offered by the mobile operators, associated with the fixed-to-mobile substitution trend, influenced such behavior.

Long Distance Services FF + SMP + VC2 and VC3:

Revenue from long distance services fell 6.4% in the quarter and 12.1% from 2Q09, as a result of lower long-distance traffic, which was affected by more promotions made by mobile operators’ on-net long-distance traffic offers.

Once again, the reduction in traffic during the World Cup must be emphasized.

Remuneration for Network Usage:

Remuneration for network usage, after the R$112 million elimination for inter-company transactions, dropped 5.9% from the prior quarter and rose 17.2% compared with the same period last year. The year-over-year increase is due to the inclusion of calls to fixed telephones in the bonus offered by mobile operators.

Data Communication Services:

Revenue from data transmission services rose 3.7% in the quarter and 11.7% compared with 2Q09. For another quarter, data revenue growth was driven by the “Oi Velox” fixed broadband service, which is still expanding its customer base, despite the strong expansion seen in the number of mobile broadband users. It must be noted that the corporate customer segment has contributed to this good performance.

Wireless Segment:

The Company’s policy of boosting profitability from its customer base in the mobile segment made its gross revenue from the mobile segment total R$2,805 million in 2Q10, expanding by 7.8% from the prior quarter and 19.2% from 2Q09. The quarter-over-quarter gain was mainly driven by higher revenues from subscription, outgoing calls, data and value added. When compared to 2Q09, the increase in revenue from network use also contributed to expand revenue.

Subscription revenue grew 8.4% from 1Q10 and 21.8% from 2Q09, as a result of the expansion of the post-paid customer base as well as an Improved ARPU. Revenues from outgoing calls rose 7.6% in the quarter and 15.3% compared with 2Q09. It must be highlighted that the positive contribution from the product “Oi Bonus Extra,” which encourages the client to increase his recharge with a minutes package that can be five- fold higher to talk to another Oi or a fixed-line Oi. This product aims to boost ARPU growth for these type of customers.

 

 

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Consolidated revenue from mobile network use recorded a 3.3% increase in the quarter and 11.5% compared with 2Q09. This revenue is positively influenced by the increase in the customer base in Regions I and III and the bonus offered by the wireless operators (on-net calls and calls to fixed telephones), given that customers have unused balance for off-net calls (to other mobile operators).

Revenue from “data/value added” increased 18.6% and 71.4% compared with 1Q10 and 2Q09, respectively. The increase in SMS services was boosted by promotions selling SMS packages shown during the World Cup matches. The growth in 3G users also helped increase revenue.

The ARPU of Oi Mobile equaled R$22.4 in 2Q10, amounting to 2.8% growth in the quarter and 6.7% compared with 2Q09. Year-over-year, we must highlight the increase in the mobile operation customer base in São Paulo, still incipient in 2Q09. Region III (SP) has the biggest ARPU in the country (R$27.9 in 2Q10).

3.2) Operating Expenses:

Operating expenses (excluding depreciation/amortization) totaled R$4,719 million in 2Q10, falling 4.3% quarter-over-quarter and 28.7% year over year. It must be noted that in 2Q09 there were non-recurring expenses of R$1,769 million stemming from several provisions for contingencies and other adjustments linked to the integration process with BrT.

Table 4 – Breakdown of Operating Expenses

 

		Quarter										Half-year
COST AND EXPENSES
Item - R$ million		2Q09		1Q10		2Q10		QoQ (%)		YoY (%)		1H09		1H10		Chg. (%)
Interconnection		1,325		1,354		1,208		-10.8		-8.8		2,646		2,562		-3.2
Personnel		451		391		405		3.6		-10.2		945		796		-15.8
Materials		116		77		59		-23.4		-49.1		213		136		-36.2
Handset Costs/Other (COGS)*		150		41		49		19.5		-67.3		344		91		-73.5
Third-Party Services		1,770		1,694		1,720		1.5		-2.8		3,515		3,414		-2.9
Marketing		153		124		118		-4.8		-22.9		283		242		-14.5
Rent and Insurance		394		360		389		8.1		-1.3		783		749		-4.3
Provision for Bad Debts		406		305		247		-19.0		-39.2		804		552		-31.3
Other Operating Expenses (Revenue), Net		1,857		584		524		-10.3		-71.8		2,385		1,108		-53.5
TOTAL		6,623		4,930		4,719		-4.3		-28.7		11,918		9,649		-19.0

*	Other: sim card, mini modem, TV transmission equipment and mobile phone peripherals.

**	Reflects the quarterly balance sheet as of June 2009, which was filed again in March 2010

 

 

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Interconnection:

Consolidated interconnection costs totaled R$1,208 million in 2Q10, dropping by 10.8% and 8.8% in the quarter and year on year, respectively. These were influenced mostly by higher on-net traffic at Oi. It must be highlighted that this expense item is benefited by the insourcing of operations that were previously made with companies outside of the group. This is one of the synergy items that stemmed from the tie-up with BrT.

Personnel:

Personnel-related spending totaled R$405 million in 2Q10, remaining stable in the quarter and declining by 10.2% compared with 2Q09. This annual drop stems from spending on workforce optimization that took place in 2009 during the integration process of Oi and BrT.

Handset Costs and Others (COGS):

Handset costs and others (COGS) declined 67.3% year-over-year and were mostly stable compared with 1Q10.

The decision of adopting in Region II the strategy of subsidizing only the post-paid handsets sold to the corporate segment, and the sale of just sim cards in the prepaid segment, have been reducing the acquisition cost for clients and, as a result, the COGS.

Third-Party Services:

Spending on third-party services totaled R$1,720 thousand in 2Q10, in a 1.5% rise from the previous quarter and a 2.8% fall year-over-year. The quarterly increase is manly a product of higher spending on sales commission in the post-paid segment. The annual reduction is concentrated on plant maintenance, because the service was made by just a few suppliers.

Marketing:

Spending on marketing totaled R$118 million in 2Q10, decreasing by 4.8% and 22.9% compared with 1Q10 and 2Q09, respectively. Lower spending on promotions and events had a positive influence on the annual change. Also, 2Q09 was impacted by the launch of offers and the unification of the brand in Region II.

Provision for Bad Debts:

The provision for bad debts declined by 39.2% compared with 2Q09 and by 19.0% compared with 1Q10, providing a positive contribution, especially the reduction in wireline services. It must be highlighted that the first quarter of the year has historically a higher provision for bad debts, compared with the other quarters. The year-over-year reduction stems mainly from the fact the economy was still recovering in 2Q09. The provision for bad debts accounted for 2.1% of gross revenue in 2Q10 compared to 2.6% in 1Q10 and 3.6% in 2Q09.

 

 

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Other Operating Expenses (Income):

“Other operating expenses (Income)” reached R$524 thousand in 2Q10, in a 10.3% reduction compared with 1Q10 and 71.8% less than in 2Q09.

The quarterly drop was mainly due to the reversal of a tax provision amid favorable decisions obtained by the Company’s subsidiaries in lawsuits. The year-over-year analysis is impacted by the non-recurring effects related to the contingency provisions, markedly PEX (Expansion Plans) booked at Brasil Telecom in 2Q09.

For a better understanding of the quarterly results, we demonstrate, next, the change in PEX at Brasil Telecom.

 

		Statement for Expansion Plan
Brasil Telecom - R$ thousand		Contigency			Deposits in Court
Balance on 12/31/2009		2,664,940			3,598,432
Additions		199,928			348,924
Payments		(47,053	)		—
Withdrawals		—			(86,544	)
Inflation Accounting		3,576			97,512
Balance on 06/30/2010		2,821,391			3,958,324

3.3) Other Items in the Consolidated Result:

EBITDA:

Table 5 – EBITDA and EBITDA Margin

 

		Quarter															Half-Year
TNL Consolidated		2Q09*			1Q10			2Q10			QoQ			YoY			1H09			1H10			YoY
EBITDA (R$ Mn)		2,449			2,532			2,674			5	.6%		9	.2%		4,826			5,206			7	.9%
EBITDA Margin (%)		33	.5%		33	.9%		36	.2%		2	.3 p.p.		2	.7 p.p.		32	.6%		35	.0%		2	.4 p.p.
TMAR Consolidated		2Q09			1Q10			2Q10			QoQ			YoY			1H09			1H10			YoY
EBITDA (R$ Mn)		2,459			2,543			2,685			5	.6%		9	.2%		4,848			5,228			7	.8%
EBITDA Margin (%)		33	.8%		34	.1%		36	.4%		2	.3 p.p.		2	.6 p.p.		32	.9%		35	.3%		2	.4 p.p.
BrTO Consolidated		2Q09			1Q10			2Q10			QoQ			YoY			1H09			1H10			YoY
EBITDA (R$ Mn)		1,033			867			796			-8	.2%		-22	.9%		1,951			1,663			-14	.8%
EBITDA Margin (%)		39	.0%		32	.9%		30	.8%		-2	.1 p.p.		-8	.2 p.p.		36	.0%		31	.8%		-4	.2 p.p.

*	EBITDA and EBITDA Margin in 2Q09 are recurring.

 

 

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Consolidated EBITDA reached R$2,674 million in 2Q10 with a 36.2% margin, expanding 5.6% compared with the prior quarter and 9.2% from the recurring EBITDA in 2Q09. The improvement in EBITDA compared with 1Q10 is basically due to a cost reduction resulting from the synergies obtained in the process of integrating management and operations following the acquisition of Brasil Telecom, and the policy of boosting the profitability from customers in the mobile segment.

TNL PCS, a mobile operator in Regions I and III, posted EBITDA of R$823 million in 2Q10, R$71 million (or 9.5%) higher than in 1Q10. The 39.0% EBITDA margin represents a 1.4 percentage point increase in the period. The mobile operation in São Paulo had a slightly positive contribution. We broke even there during 2Q10, 18 months after the operation started in the region.

Net Financial Income (Expenses):

Net financial expenses totaled R$560 million, decreasing by 2.4% compared with 1Q10 and increasing by 12.9% compared with 2Q09. In the quarter, the reduction in financial expenses was due to a slightly lower net debt, as well as a reduction in the average cost to 110% of the CDI. Compared with 2Q09, the rise in financial expenses was given by the real appreciation versus the U.S. dollar in the same period of last year.

Table 6 – Net Financial Income (Expenses)

 

		Quarter									Year
R$ Million		2Q09			1Q10			2Q10			1H09			1H10
Financial Income		455			362			494			862			856
Interest on financial investments		206			161			214			411			375
Other financial income		248			201			280			451			481
Financial Expenses		(951	)		(936	)		(1,054	)		(1,988	)		(1,990	)
Interest on loans and financing		(650	)		(582	)		(659	)		(1,275	)		(1,242	)
Foreign exchange effect on loans and financing		10			(65	)		(81	)		(75	)		(146	)
Other Financial Expenses		(310	)		(289	)		(314	)		(638	)		(602	)
Net Financial Income (Expenses)		(496	)		(574	)		(560	)		(1,126	)		(1,134	)

 

*	Net of foreign exchange hedge result

Depreciation/Amortization:

Consolidated spending on depreciation and amortization was virtually stable compared with the prior quarter and 21.9% lower compared with 2Q09, totaling R$1,134 million in 2Q10.

The reduction stems from a change in the economic service life of the fixed assets, in a move to standardize the economic service life rates of the assets after the acquisition of BrT. The operation’s appraisal was approved in December 2009 by the Company’s Board of Directors, and its effect started to be reflected in the results in 1Q10

 

 

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Table 7 – Depreciation and Amortization

 

		Quarter										Year
R$ million		2Q09		1Q10		2Q10		QoQ (%)		YoY (%)		1S09		1S10		YoY (%)
Fixed Line / TNL		1,073		834		844		1.2		-21.3		2,007		1,678		-16.4
Depreciation		855		640		653		2.0		-23.6		1,723		1,293		-25.0
Amortization of Goodwill		218		193		192		-0.5		-11.9		284		385		35.6
Mobile Business		379		289		289		0.0		-23.7		751		578		-23.0
Depreciation		301		210		211		0.5		-29.9		594		421		-29.1
License/Deferred Amortization		78		79		79		0.0		1.3		157		157		0.0
Total		1,452		1,123		1,134		1.0		-21.9		2,758		2,256		-18.2

Net Earnings:

In 2Q10, the company posted net earnings of R$444 million, up from a loss in 2Q09. The return to positive earnings comes, as a result of a better operating performance.

Comparing this with 1Q10, spending on income tax and social contribution in that quarter were positively impacted by deferred tax credits.

Table 8 – Net Earnings

 

		Quarter									Half-year
TNL Consolidated		2Q09			1Q10			2Q10			1H09			1H10
Net Earnings (R$ Mn)		-146			496			444			-135			940
Net Margin		-2.0	%		6.6	%		6.0	%		-0.9	%		6.3	%
Earnings per Share (R$)		-0.382			1.297			1.160			-0.353			2.456
Earnings per ADR (US$)		-0.184			0.712			0.648			-0.161			1.360
TMAR Consolidated		2Q09			1Q10			2Q10			1H09			1H10
Net Earnings (R$ Mn)		-178			588			543			-175			1,132
Net Margin		-2.4	%		7.9	%		7.4	%		-1.2	%		7.6	%
Earnings per Share (R$)		-0.745			2.467			2.280			-0.735			4.747
BrTO Consolidated		2Q09			1Q10			2Q10			1H09			1H10
Net Earnings (R$ Mn)		-1,438			300			237			-1,517			537
Net Margin		-54.3	%		11.4	%		9.2	%		-28.0	%		10.3	%
Earnings per Share (R$)		-2.625			0.509			0.401			-2.770			0.910

 

 

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4) D EBT AND C APITAL E XPENDITURE :

4.1) Debt:

Gross debt totaled R$32,355 million in June 2010, R$2.4 billion higher than in the prior quarter, mainly as a result of an issuance of debentures (amounting to R$ 2 billion) in April 2010 and the Commercial Paper (amounting to R$ 1.5 billion) in May 2010.

During the same period, the consolidated net debt shrank by R$315 million from 1Q10 to end the quarter at R$20,955 million, despite the payment of extraordinary dividends made by TNL in May 2010 in the amount of R$1.2 billion. Net debt to EBITDA stood at 2.1 times for the last 12 months.

Debt in foreign currencies accounted for 18.3% of total gross debt at the end of June 2010. As a result of several currency hedging operations, the exposure to consolidated currency swings made up just 4.0% of the total gross debt (US$712 million or R$1,282 million). We highlight that debt payments through November 2013 are covered by hedging contracts and a cash balance kept in dollars.

In the second quarter of 2010, the effective debt cost equaled 110% of the CDI rate.

Table 9 – Debt – TNL Consolidated

 

R$ million		Jun-09			Mar-10			Jun-10			% Gross Debt
Short Term		6,760			10,119			12,143			37.5	%
Long Term		22,847			19,820			20,212			62.5	%
Total Debt		29,607			29,939			32,355			100.0	%
In Local Currency		23,198			24,062			26,443			81.7	%
In Foreign Currency		5,152			5,080			5,401			16.7	%
Swaps		1,256			797			510			1.6	%
(-) Cash		(7,968	)		(8,669	)		(11,400	)		35.2	%
(=) Net Debt		21,638			21,270			20,955			64.8	%

Table 10 – Debt – TMAR Consolidated

 

R$ million		Jun-09			Mar-10			Jun-10			% Gross Debt
Short Term		6,404			10,022			10,507			34.5	%
Long Term		23,165			19,579			19,991			65.5	%
Total Debt		29,569			29,601			30,498			100.0	%
In Local Currency		24,916			24,023			24,926			81.7	%
In Foreign Currency		3,613			4,809			5,087			16.6	%
Swaps		1,040			769			485			1.6	%
(-) Cash		(7,523	)		(8,275	)		(10,724	)		35.2	%
(=) Net Debt		22,046			21,326			19,774			64.8	%

 

 

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Table 11 – Debt – BrTO Consolidated

 

R$ million		Jun-09			Mar-10			Jun-10			% Gross Debt
Short Term		957			972			1,263			30.1	%
Long Term		3,867			3,415			2,938			69.9	%
Total Debt		4,824			4,387			4,201			100.0	%
In Local Currency		3,999			3,780			3,581			85.2	%
In Foreign Currency		587			473			487			11.6	%
Swaps		237			134			133			3.1	%
(-) Cash		(1,614	)		(2,337	)		(2,882	)		68.6	%
(=) Net Debt		3,210			2,050			1,319			31.4	%

The schedule for the amortization of long-term consolidated gross debt is shown below:

Table 12 – Schedule for the Amortization of Long-Term Consolidated Gross Debt

 

(R$ million)		2010		2011		2012		2013		2014		2015 onwards		Total
Gross Debt amortization		7,678		5,706		5,191		4,176		4,577		5,027		32,355
Foreign Currency Amortization		1,184		934		543		690		753		1,807		5,911
Local Currency Amortization		6,494		4,772		4,648		3,486		3,824		3,220		26,443

4.2) Capital expenditure:

Consolidated capital expenditure totaled R$446 million in 2Q10. It must be noted that the heavy capital expenditure made in the last quarter of 2009 in São Paulo and in Region II allowed the company to have a lower CAPEX in the first quarter of 2010, without affecting the group’s strategic priorities. In the quarter, 78% of the CAPEX was earmarked for growth businesses (of which 41% was invested in data and 37% in the wireless segment).

Capital expenditures in the wireline segment is concentrated on digital inclusion projects in schools, expanding the supply of broadband (Velox) services and the supply of data packages for corporate clients. The capital expenditures in the wireless segment were focused on expanding coverage to include all regions.

Throughout 2010, the company has been undertaking several efforts to optimize the combined network (Oi+BrT) in order to seize the relevant synergies on the mobile and data networks, enabling an increase in capacity without the need for additional capital expenditure in 2010.

 

 

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Table 13 – Capital Expenditure

 

		Quarter										Half-Year
R$ million		2Q09		1Q10		2Q10		QoQ (%)		YoY (%)		1H09		1H10		YoY (%)
Wireline		473		237		281		18.6		-40.6		995		518		-47.9
Growth & Quality		211		82		99		20.7		-53.1		440		180		-59.1
Data / Communic. Systems / Other		263		156		182		16.7		-30.8		554		338		-39.0
Wireless		466		135		166		23.0		-64.4		850		300		-64.7
Expansion and Quality		466		135		166		23.0		-64.4		850		300		-64.7
TOTAL		940		372		446		19.9		-52.6		1,845		818		-55.7

4.3) Consolidated Cash Flow:

Operating cash generation in 2Q10 reached R$1,752 million, and was mainly aimed at funding the company’s capital expenditures activities. In the period, the resources were invested basically in cash investments (amounting to R$ 309 million) and Capex disbursements (amounting to R$663 million).

 

 

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Table 14 – Cash Flow: Indirect Cash Flow Statement

 

R$ Million		1Q10			2Q10
Earnings Befores Taxes		839			983
Result Items that do not affect the Cash Balance		2,492			2,629
Changes to Shareholder’s Equity		(453	)		(210	)
Cash Balance from Operations*		(490	)		(1,650	)
Operating cash generation		2,387			1,752
Cash balance invested in capital expenditure		(2,089	)		(1,168	)
Cash flow net of capital expenditure		298			584
Cash balance invested in financing activities		(307	)		1,839
Cash flow net of financing activities		(9	)		2,423
Initial cash balance		6,206			6,197
Final cash balance		6,197			8,619

 

*	Financial charges, income tax, minority interests, dividends and interest on capital, surplus reserve and treasury shares.

PLEASE NOTE : The main spreadsheets in this Press Release will be available on the company’s website ( www.oi.com.br/ri ), in “About the Company / the Company in Numbers.”

5) A DDITIONAL I NFORMATION :

5.1) Oi launches offer for customers to sample free-of-charge mobile-phone Internet for as many as two months.

In order to sample internet access on an Oi mobile phone free of charge, the new post-paid customers must subscribe to one Oi Data plan. In this case, the client only starts paying for the plan in the third month. During the first two months, the client can benefit from internet on their mobile phone and evaluate whether the chosen plan meets their needs. After the testing period, customers may change to a different plan or cancel it altogether without paying any fees.

Since June, the new post-paid clients who buy a 2Gb data plan for R$69.90, or 10Gb for R$109.90, will be entitled to the test for as many as 2 months and have a credit of up to R$1,750 that can be used in any way, even to acquire a smart phone, according to the plan they have subscribed to. The clients who subscribe to the Blackberry Bis data plan, with unlimited access to the BIS service for R$64.90, are not entitled to the testing period; however, they get a larger credit of up to R$1,900, according to their plans. But buying an iPhone handset and subscribing to one Oi Data plan (200MB, 2GB or 10GB, depending on the minimum for each plan), will lead to as many as 2 months free and a credit of up to R$2,100 when the handset is bought.

 

 

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Oi believes in the customer’s total freedom. The company advocates true portability, which consists in number portability, the right of consumers to have their handsets unblocked and the exemption of contract penalty for individuals, so that the client can experience the operator’s services and plans for as long as they wants.

5.2) Result of the Extraordinary General Meeting of BRT on voting the new exchange ratio

At the Extraordinary General Meeting on June 16, 2010, the minority shareholders of common and preferred BRT stock did not approve the proposal for new indirect exchange ratios for BRT and TMAR stock, which would complete the last step of the Corporate Reorganization.

Given the rejection of the new exchange ratios, TMAR informed that the corporate simplification, as proposed and announced in a Material Fact on April 25, 2008, had been suspended until further notice.

5.3) TNL: Payment of Dividends

On May 25, 2010, TNL started paid extraordinary dividends, as approved at the Extraordinary General Meeting of April 16, 2010.

The payment amounted to R$1,199,978,169.66, as the common (TNLP3) and preferred shares (TNLP4) were entitled to the same amount of R$3.1369 each.

The shares have been trading net of dividends at Bovespa since April 19, 2010, based on the shareholder structure of April 16, 2010.

5.4) Filing of 20-F and Reference Form

TNL and BRT filed on July 1, 2010 their Annual Report (Form 20-F) with the SEC (Securities & Exchange Commission) for the year ended on December 31, 2009. The report is available at www.sec.gov or on the Company’s web site at www.oi.com.br/ir.

Any investor or shareholder who wishes to receive a free printed copy of the report may contact the company at invest@oi.net.br.

In addition, TNL, TMAR and BRT filed their Reference Forms with the CVM.

5.5) Oi Investor ’ s Day

Oi is pleased to invite you to Oi Investor’s Day, which will be held in São Paulo and New York. The event in São Paulo will be on August 11 at 5.00pm at the Grant Hyatt Hotel. For more details, visit the hot-site: www.oisday.com.br. The event in New York will take place on September 10 at the New York Palace Hotel, and more details will be available soon.

 

 

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The events aim to present the financial evolution, operating performance and strategies for the future of the company. The event will feature presentations by the company’s main executives; Luiz Eduardo Falco (CEO), Alex Zornig (CFO and IRO), João Silveira (Marketing Director) and Pedro Ripper (Strategy Director).

5.5) Material fact: industrial alliance with Portugal telecom

On July 28. 2010, Telemar Participações (TmarPart) and its subsidiaries Tele Norte Leste Participações (TNL) and Telemar Norte Leste (TMAR) disclosed a Material Fact about the Industrial Alliance with Portugal Telecom. Click on the link below for the Material Fact:

http://www.mzweb.com.br/oi/web/arquivos/TMARPart_TNLP_TMAR_FatoRelevante_20100728_eng.pdf

 

 

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APPENDIX

COST AND EXPENSES MIX – tnlp consolidated

 

		Quarter												Half-year
COST AND EXPENSES
Item - R$ million		2Q09			1Q10		2Q10			QoQ (%)		YoY (%)		1H09		1H10		Chg. (%)
Interconnection		1,325			1,354		1,208			-10.8		-8.8		2,646		2,562		-3.2
Personnel		451			391		405			3.6		-10.2		945		796		-15.8
Materials		116			77		59			-23.4		-49.1		213		136		-36.2
Handset Costs/Other (COGS)*		150			41		49			19.5		-67.3		344		91		-73.5
Third-Party Services		1,770			1,694		1,720			1.5		-2.8		3,515		3,414		-2.9
Marketing		153			124		118			-4.8		-22.9		283		242		-14.5
Rent and Insurance		394			360		389			8.1		-1.3		783		749		-4.3
Provision for Bad Debts		406			305		247			-19.0		-39.2		804		552		-31.3
Other Operating Expenses (Revenue), Net		1,857			584		524			-10.3		-71.8		2,385		1,108		-53.5
TOTAL		6,623			4,930		4,719			-4.3		-28.7		11,918		9,649		-19.0
Interconnection		1,325			1,354		1,208			-10.8		-8.8		2,646		2,562		-3.2
Handset Costs		150			41		49			19.5		-67.3		344		91		-73.5
Cost of Services		1,652			1,470		1,541			4.8		-6.7		3,204		3,011		-6.0
Personnel		192			143		148			3.5		-22.9		375		291		-22.4
Third-Party Services		790			723		685			-5.3		-13.3		1,537		1,408		-8.4
Materials		107			71		52			-26.8		-51.4		197		123		-37.6
Rent and Insurance		340			294		424			44.2		24.7		674		718		6.5
Anatel Concession Contract		48			40		37			-7.5		-22.9		71		77		8.5
Fistel		224			181		178			-1.7		-20.5		332		360		8.4
Other		(48	)		18		17			-5.6		-135.4		19		35		84.2
Selling Expenses		1,362			1,204		1,184			-1.7		-13.1		2,709		2,388		-11.8
Personnel		106			88		88			0.0		-17.0		234		176		-24.8
Third-Party Services		661			657		693			5.5		4.8		1,307		1,350		3.3
Marketing		153			124		118			-4.8		-22.9		283		242		-14.5
Materials		6			3		5			66.7		-16.7		10		8		-20.0
Rent and Insurance		3			2		1			-50.0		-66.7		7		3		-57.1
Other		27			25		32			28.0		18.5		65		57		-12.3
Provisions for Bad Debts and Receivable write-of		406			305		247			-19.0		-39.2		804		552		-31.3
General and Administrative Expenses		538			553		487			-11.9		-9.5		1,137		1,040		-8.5
Personnel		153			160		169			5.6		10.5		336		328		-2.4
Third-Party Services		320			314		342			8.9		6.9		671		656		-2.2
Materials		4			3		2			-33.3		-50.0		7		5		-28.6
Rent and Insurance		52			64		(36	)		-156.3		-169.2		103		28		-72.8
Other		10			13		10			-23.1		0.0		20		23		15.0
Other Operating Expenses (Revenue), Net		1,596			308		249			-19.2		-84.4		1,878		557		-70.3
		Quarter												Half-Year
Third-Party Services - R$ Million		2Q09			1Q10		2Q10			QoQ (%)		YoY (%)		1H09		1H10		YoY (%)
Network Maintenance (COS - Cost of Services)		616			530		514			-3.0		-16.6		1,199		1,044		-12.9
Sales Commissions and Expenses (Selling Exp.)		273			293		311			6.1		13.9		526		604		14.8
Postage and Collection (Selling Exp.)		137			142		142			0.0		3.6		281		284		1.1
Electricity (COS / G&A)		145			142		142			0.0		-2.1		282		285		1.1
Data Processing (COS / G&A)		115			126		118			-6.3		2.6		233		244		4.7
Call Center Operations (Selling Exp.)		150			183		179			-2.2		19.3		312		362		16.0
Consulting and Legal Services (COS / G&A)		129			110		117			6.4		-9.3		281		227		-19.2
Printing and Clearing (Selling Exp.)		26			24		29			20.8		11.5		54		52		-3.7
Others		180			144		168			16.7		-6.7		455		312		-31.4
Total		1,770			1,694		1,720			1.5		-2.8		3,623		3,414		-5.8

 

 

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6) FINANCIAL STATEMENTS

6.1) TELE NORTE LESTE PARTICIPAÇÕES - tnlp consoliDATED

R$ mILLION

 

Income Statement		2Q09			1Q10			2Q10			1H09			1H10
Wireline Services Revenues		8,763.5			8,842.3			8,673.7			17,690.4			17,516.0
Local Services		4,407.2			4,264.0			4,219.5			8,847.7			8,483.6
Subscription Charges		2,751.3			2,777.2			2,797.9			5,513.6			5,575.1
Local Traffic		494.8			424.2			387.8			1,000.6			812.0
Installation Fees		29.6			41.2			41.8			48.2			83.0
Collect Calls		1.8			0.8			0.7			3.4			1.6
Other Local Revenues		0.7			0.7			0.7			1.4			1.4
Fixed-to-Mobile (VC1)		1,129.1			1,019.8			990.6			2,280.6			2,010.4
Long Distance		1,489.6			1,550.3			1,377.3			3,090.1			2,927.6
Intra-State		665.2			689.1			722.6			1,368.4			1,411.7
Inter-State		144.0			129.0			115.1			288.9			244.1
Inter-Regional		311.3			378.1			214.0			663.4			592.1
International		20.1			19.2			16.2			41.6			35.4
Fixed-to-Mobile (VC2 and VC3)		349.1			334.9			309.3			727.7			644.3
Advanced Voice		66.9			96.0			79.5			147.5			175.4
Public Telephones		250.0			164.7			153.4			499.1			318.1
Additional Services		243.6			251.4			256.6			490.7			508.0
Network Usage Remuneration		192.5			239.1			224.8			422.2			463.9
Data Transmission Services		2,113.7			2,276.8			2,362.5			4,193.0			4,639.3
ADSL (Velox)		1,167.4			1,275.5			1,318.0			2,265.1			2,593.4
Leased Lines (EILD)		234.9			246.4			224.0			474.1			470.3
Leased Lines (SLDD/SLDA)		144.5			126.1			137.7			294.8			263.7
IP Services		235.5			310.8			338.0			474.3			648.8
Packet switch and frame relay		108.1			95.5			94.2			212.9			189.6
Other Data Services		223.2			222.7			250.7			471.7			473.4
Wireless Services Revenues		2,354.1			2,601.3			2,805.2			4,623.7			5,406.5
Subscription Charges		541.9			608.5			659.9			1,075.9			1,268.4
Outgoing Calls		885.0			948.3			1,019.8			1,747.6			1,968.1
Domestic/International Roaming		27.4			39.4			29.6			61.8			69.0
Network Usage Remuneration		565.6			611.1			631.1			1,082.2			1,242.2
Data / Value Added Services		233.8			337.6			400.5			466.4			738.2
Handset Sales		100.3			56.3			64.2			189.8			120.5
Other Services		66.1			101.0			89.4			111.5			190.4
Gross Operating Revenue		11,183.6			11,544.6			11,568.3			22,425.6			23,112.9
Taxes and Deductions		(3,881.5	)		(4,082.8	)		(4,174.7	)		(7,636.2	)		(8,257.5	)
Net Operating Revenue		7,302.1			7,461.8			7,393.6			14,789.4			14,855.4
Operating Expenses		(6,622.8	)		(4,930.1	)		(4,719.1	)		(11,918.2	)		(9,649.2	)
Cost of Services		(1,652.0	)		(1,470.0	)		(1,540.8	)		(3,204.0	)		(3,010.8	)
Cost of Goods Sold		(150.0	)		(41.4	)		(49.2	)		(344.0	)		(90.6	)
Interconnection Costs		(1,324.9	)		(1,353.9	)		(1,208.0	)		(2,646.3	)		(2,561.9	)
Selling Expenses		(1,362.0	)		(1,203.7	)		(1,183.8	)		(2,709.4	)		(2,387.5	)
General and Administrative Expenses		(538.2	)		(553.0	)		(488.1	)		(1,136.8	)		(1,041.1	)
Other Operating (Expenses) Revenue, net		(1,595.9	)		(308.1	)		(249.1	)		(1,877.7	)		(557.2	)
EBITDA		679.3			2,531.7			2,674.5			2,871.2			5,206.2
Margin %		9.3	%		33.9	%		36.2	%		19.4	%		35.0	%
Depreciation and Amortization		(1,452.3	)		(1,122.7	)		(1,133.6	)		(2,758.2	)		(2,256.3	)
EBIT		(773.0	)		1,409.0			1,540.9			112.9			2,949.9
Equity Accounting		8.2			3.5			2.4			7.0			5.9
Financial Expenses		(950.6	)		(935.9	)		(1,053.8	)		(1,988.1	)		(1,989.6	)
Financial Income		454.6			362.2			493.9			862.1			856.1
Income Before Tax and Social Contribution		(1,260.8	)		838.8			983.5			(1,006.1	)		1,822.3
Income Tax and Social Contribution		207.9			(83.4	)		(320.2	)		116.7			(403.6	)
Minority Interest		906.9			(259.5	)		(219.4	)		754.2			(478.9	)
Net Income		(146.0	)		496.0			443.8			(135.2	)		939.8
Margin %		-2.0	%		6.6	%		6.0	%		-0.9	%		6.3	%
Outstanding Shares - Thousand (exc.-treasury)		382,425			382,536			382,632			382,425			382,632
Income per share (R$)		(0.382	)		1.297			1.160			(0.353	)		2.456
Income per ADR (US$)		(0.184	)		0.712			0.648			(0.161	)		1.360

 

 

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6.1) TELE NORTE LESTE PARTICIPAÇÕES - tnlp consoliDATED (CONTINUED)

 

R$ mILLION

 

Balance Sheet		6/30/09			3/31/10			6/30/10
TOTAL ASSETS		58,640			61,216			63,115
Current		19,684			19,126			22,159
Cash		6,466			6,197			8,619
Financial investments		1,478			2,464			2,772
Accounts Receivable		6,115			5,925			5,887
Recoverable Taxes		3,474			2,486			2,677
Inventories		164			142			116
Assets in Escrow		845			649			772
Other Current Assets		1,141			1,264			1,316
Non-Current Assets		38,956			42,090			40,955
Long Term		7,164			8,739			8,316
Recoverable and Deferred Taxes		4,484			5,256			4,895
Accounts Receivable		24			8			9
Assets in Escrow		2,091			2,995			2,919
Other		564			479			493
Investments		55			55			55
Property Plant and Equipment		20,199			22,016			21,331
Intagible Assets		11,222			11,031			11,027
Deferred Assets		317			249			227
Balance Sheet		6/30/09			3/31/10			6/30/10
TOTAL LIABILITIES		58,640			61,216			63,115
Current		16,417			17,843			19,993
Suppliers		3,320			3,812			3,566
Loans and Financing		6,760			10,119			12,143
Payroll and Related Accruals		334			367			391
Pension Fund Provision		52			21			34
Payable Taxes		2,267			1,707			1,862
Dividends Payable		1,937			360			390
Other Accounts Payable		1,746			1,457			1,607
Non-Current Liabilities		28,941			27,264			27,542
Long Term		28,941			27,264			27,542
Loans and Financing		22,847			19,820			20,212
Payable and Deferred Taxes		594			1,672			1,647
Contingency Provisions		3,171			3,256			3,133
Pension Fund Provision		608			575			575
Outstanding authorizations		1,547			1,553			1,584
Other Accounts Payable		175			387			390
Minority Interest		5,019			7,617			7,838
Shareholders’ Equity		8,263			8,491			7,742
Capital Stock		5,449			5,449			5,449
Capital Reserve		41			43			43
Surplus Reserve		3,275			2,862			1,660
Treasury shares		(367	)		(358	)		(354	)
Retained Earnings		(135	)		496			944

 

 

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6.1) TELE NORTE LESTE PARTICIPAÇÕES - tnlp consoliDATED (CONTINUED)

 

R$ mILLION

 

Free Cash Flow		1Q10			2Q10
Earnings (loss) before taxes - (A)		839			983
Result items that do not affect the Cash Balance		2,492			2,629
Financial charges		782			979
Depreciation/amortization		1,100			1,111
Losses on accounts receivable		305			247
Provisions for legal contingencies		242			240
Provision for pension funds		3			(3	)
Amortization of deferred assets		23			23
Equity adjustment		(3	)		(2	)
Remaining value from written-off fixed asset		20			17
Provision/reversal of losses on assets that have been shut down		(4	)		(2	)
Monetary correction of the Tax Refinancing Program		25			20
(C) = (A) - (B)		3,331			3,612
Changes to Operating Assets		(467	)		(297	)
Accounts receivable		(288	)		(209	)
Amounts receivable		(6	)		(9	)
Deferred and recoverable taxes		136			(50	)
Prepaid expenses		(268	)		75
Inventory		21			26
Other assets		(63	)		(130	)
Changes to Operating Liabilities		13			86
Suppliers		206			7
Payroll, taxes and social benefits		5			24
Provision for Pension Funds		(86	)		16
Taxes payable and deferred		224			229
Tax Refinancing Program		(65	)		(39	)
Provisions for legal contingencies		(219	)		(236	)
Other liabilities		(52	)		86
Cash Balance from Operations		(491	)		(1,650	)
Financial charges		(335	)		(1,472	)
Income tax and social contribution		(156	)		(178	)
Operating Cash Generation		2,386			1,752
Investment cash flow		(2,089	)		(1,168	)
Short-term investment		(648	)		(309	)
Acquisitions of fixed/intangible assets		(1,119	)		(663	)
Assets in escrow		(322	)		(197	)
Cash Flow net of Capital Expenditure		297			583
Financing activity cash flow		(307	)		1,839
Borrowings		523			4,332
Payments of loans and debentures		(828	)		(1,331	)
Payment of dividend and interest on capital		(1	)		(1,163	)
Cash flow net of Financings		(10	)		2,422
Net increase (reduction) of cash and equivalent		(9	)		2,423
Cash and equivalent at the start of period		6,206			6,197
Cash and equivalent at the end of period		6,197			8,619

 

 

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6.2) TELEmar norte leste - tmar consoliDATED

R$ mILLION

 

Income Statement		2Q09			1Q10			2Q10			1H09			1H10
Wireline Services Revenues		8,764.6			8,842.1			8,673.7			17,692.4			17,515.8
Local Services		4,407.2			4,264.0			4,219.5			8,847.7			8,483.6
Subscription Charges		2,751.3			2,777.2			2,797.9			5,513.6			5,575.1
Local Traffic		494.8			424.2			387.8			1,000.6			812.0
Installation Fees		29.6			41.2			41.8			48.2			83.0
Collect Calls		1.8			0.8			0.7			3.4			1.6
Other Local Revenues		0.7			0.7			0.7			1.4			1.4
Fixed-to-Mobile (VC1)		1,129.1			1,019.8			990.6			2,280.6			2,010.4
Long Distance		1,489.6			1,550.3			1,377.3			3,090.1			2,927.6
Intra-State		665.2			689.1			722.6			1,368.4			1,411.7
Inter-State		144.0			129.0			115.1			288.9			244.1
Inter-Regional		311.3			378.1			214.0			663.4			592.1
International		20.1			19.2			16.2			41.6			35.4
Fixed-to-Mobile (VC2 and VC3)		349.1			334.9			309.3			727.7			644.3
Advanced Voice		66.9			96.0			79.5			147.5			175.4
Public Telephones		250.0			164.7			153.4			499.1			318.1
Additional Services		243.6			251.4			256.6			490.7			508.0
Network Usage Remuneration		192.5			239.1			224.8			422.2			463.9
Data Transmission Services		2,114.8			2,276.6			2,362.5			4,195.0			4,639.1
Wireless Services Revenues		2,366.7			2,601.3			2,805.2			4,623.7			5,406.5
Subscription Charges		541.9			608.5			659.9			1,075.9			1,268.4
Outgoing Calls		885.0			948.3			1,019.8			1,747.6			1,968.1
Domestic/International Roaming		27.4			39.4			29.6			61.8			69.0
Network Usage Remuneration		565.6			611.1			631.1			1,082.2			1,242.2
Data / Value Added Services		246.4			337.6			400.5			466.4			738.2
Handset Sales		100.3			56.3			64.2			189.8			120.5
Other Services		28.5			76.1			63.7			62.8			139.8
Gross Operating Revenue		11,159.7			11,519.5			11,542.6			22,378.9			23,062.0
Taxes and Deductions		(3,875.3	)		(4,074.1	)		(4,165.3	)		(7,625.1	)		(8,239.3	)
Net Operating Revenue		7,284.4			7,445.4			7,377.3			14,753.8			14,822.7
Operating Expenses		(6,594.6	)		(4,902.9	)		(4,692.0	)		(11,859.9	)		(9,594.9	)
Cost of Services Provided		(1,635.7	)		(1,455.8	)		(1,427.7	)		(3,174.6	)		(2,883.5	)
Cost of Goods Sold		(150.0	)		(41.4	)		(49.2	)		(344.0	)		(90.6	)
Interconnection Costs		(1,324.9	)		(1,353.9	)		(1,208.0	)		(2,646.3	)		(2,561.9	)
Selling Expenses		(1,299.9	)		(1,198.6	)		(1,178.6	)		(2,576.2	)		(2,377.2	)
General and Administrative Expenses		(590.1	)		(546.1	)		(580.9	)		(1,246.0	)		(1,127.0	)
Other Operating (Expenses) Revenue, net		(1,594.1	)		(307.1	)		(247.5	)		(1,872.8	)		(554.6	)
EBITDA		689.8			2,542.5			2,685.3			2,894.0			5,227.8
Margin %		9.5	%		34.1	%		36.4	%		19.6	%		35.3	%
Depreciation and Amortization		(1,460.6	)		(1,131.3	)		(1,142.2	)		(2,774.2	)		(2,273.5	)
EBIT		(770.8	)		1,411.2			1,543.1			119.8			2,954.3
Equity Accounting		2.3			0.4			(1.8	)		(2.4	)		(1.4	)
Financial Expenses		(939.8	)		(985.5	)		(999.1	)		(1,986.2	)		(1,984.6	)
Financial Income		454.4			394.9			447.7			855.4			842.6
Income Before Tax and Social Contribution		(1,253.9	)		821.0			989.9			(1,013.4	)		1,810.9
Income Tax and Social Contribution		201.8			(79.4	)		(324.8	)		116.1			(404.2	)
Minority Interest		874.4			(153.6	)		(121.6	)		722.1			(275.2	)
Net Income		(177.6	)		588.0			543.5			(175.3	)		1,131.5
Margin %		-2.4	%		7.9	%		7.4	%		-1.2	%		7.6	%
Outstanding Shares Thousand (exc.-treasury)		238,391			238,391			238,391			238,391			238,391
Income per share (R$)		(0.745	)		2.467			2.280			(0.735	)		4.747

 

 

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6.2 ) TELEmar norte leste - tmar consoliDATED (continued)

 

R$ mILLION

 

Balance Sheet		6/30/09			3/31/10			6/30/10
TOTAL ASSETS		58,163			60,273			61,832
Current		18,935			18,645			21,148
Cash		6,022			5,804			7,948
Financial investments		1,476			2,462			2,767
Accounts Receivable		6,123			5,948			5,876
Recoverable and Deferred Taxes		3,169			2,387			2,368
Inventories		164			141			112
Assets in Escrow		845			649			771
Other Current Assets		1,136			1,255			1,305
Non-Current Assets		39,228			41,627			40,684
Long Term		7,417			8,306			8,083
Recoverable and Deferred Taxes		4,284			4,852			4,692
Financial investments		24			8			9
Assets in Escrow		2,082			2,982			2,904
Other		1,026			464			479
Investments		313			47			47
Property Plant and Equipment		20,265			22,094			21,397
Intagible Assets		10,943			10,955			10,953
Deferred		290			225			204
Balance Sheet		6/30/09			3/31/10			6/30/10
TOTAL LIABILITIES		58,163			60,273			61,832
Current		16,010			17,614			18,233
Suppliers		3,316			3,807			3,567
Loans and Financing		6,404			10,022			10,533
Payroll and Related Accruals		331			364			389
Pension fund Provision		52			21			34
Payable Taxes		2,248			1,682			1,838
Dividends Payable		1,909			224			220
Other Accounts Payable		1,751			1,493			1,653
Non-Current Liabilities		29,078			26,825			27,095
Long Term		29,078			26,825			27,095
Loans and Financing		23,165			19,579			19,965
Payable Taxes		483			1,543			1,520
Contingency Provisions		3,171			3,255			3,130
Pension fund Provision		608			575			575
Outstanding authorizations		1,547			1,553			1,584
Other Accounts Payable		104			319			320
Minority Interest		3,254			5,814			5,935
Shareholders’ Equity		9,821			10,020			10,569
Capital Stock		7,434			7,434			7,434
Capital Reserve		2,211			2,015			2,017
Treasury shares		(17	)		(17	)		(17	)
Surplus Reserve		368			0			0
Retained Earnings		(175	)		588			1,135

 

 

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6.3) tnl pcs – oi

R$ mILLION

 

Income Statement		2Q10			1Q10			2Q10			1H09			1H10
Wireless Services Revenues		2,283.3			2,660.9			2,801.6			4,395.4			5,462.5
Subscription		434.3			498.6			532.0			851.3			1,030.6
Outgoing Calls		722.6			815.7			850.3			1,402.6			1,666.0
Domestic/Internacional Roaming		24.7			33.3			26.2			54.7			59.5
Network Usage Remuneration		846.5			994.3			1,033.4			1,603.6			2,027.7
Data / Value Added		188.6			274.5			316.5			354.8			591.0
Other SMP Services		0.0			0.2			(0.0	)		0.0			0.2
Handset Sales		66.7			44.2			43.2			128.4			87.4
LD/Advanced Voice Service/Network Revenues		93.4			138.7			158.6			207.3			297.3
Gross Operating Revenue		2,376.7			2,799.6			2,960.2			4,602.6			5,759.8
Taxes and Deductions		(669.5	)		(798.5	)		(851.4	)		(1,322.7	)		(1,649.9	)
Net Operating Revenue		1,707.2			2,001.1			2,108.8			3,279.9			4,109.9
Operating Expenses		(1,308.4	)		(1,249.5	)		(1,285.6	)		(2,591.5	)		(2,535.1	)
Cost of Services Provided		(343.8	)		(377.6	)		(368.4	)		(689.7	)		(746.0	)
Cost of Goods Sold		(112.2	)		(22.9	)		(34.6	)		(260.3	)		(57.5	)
Interconnection Costs		(362.8	)		(388.4	)		(384.6	)		(721.3	)		(773.0	)
Selling Expenses		(436.6	)		(370.1	)		(401.0	)		(804.3	)		(771.1	)
General and Administrative Expenses		(107.7	)		(107.7	)		(120.1	)		(214.4	)		(227.9	)
Other Operating (Expenses) Revenue, net		54.8			17.2			23.0			98.6			40.3
EBITDA		398.8			751.6			823.2			688.5			1,574.8
Margin %		23.4	%		37.6	%		39.0	%		21.0	%		38.3	%
Depreciation and Amortization		(244.9	)		(221.0	)		(224.5	)		(478.4	)		(445.4	)
EBIT		154.0			530.7			598.7			210.1			1,129.4
Equity Accounting		(23.1	)		(14.8	)		(23.9	)		(64.2	)		(38.7	)
Financial Expenses		(58.0	)		(67.6	)		(64.8	)		(116.2	)		(132.4	)
Financial Income		81.7			99.6			112.1			173.8			211.7
Income Before Tax and Social Contribution		154.5			547.9			622.1			203.4			1,170.0
Income Tax and Social Contribution		(96.3	)		(138.5	)		(179.4	)		(81.0	)		(317.8	)
Net Income		58.2			409.4			442.7			122.4			852.2
Margin %		3.4	%		20.5	%		21.0	%		3.7	%		20.7	%

 

Balance Sheet		6/30/09		3/31/10		6/30/10
TOTAL ASSETS		12,498		14,273		14,919
Current		2,909		4,190		5,021
Cash		168		1,236		1,901
Financial investments		679		319		469
Accounts Receivable		926		1,155		1,185
Recoverable and Deferred Taxes		470		642		747
Inventories		90		77		62
Other Current Assets		576		762		657
Non-Current Assets		9,588		10,083		9,898
Long Term		2,637		2,658		2,467
Recoverable and Deferred Taxes		714		531		463
Loans and Financing		1,760		1,971		1,849
Financial investments		2		3		3
Other		161		152		151
Permanent		6,952		7,425		7,431
TOTAL LIABILITIES		12,498		14,273		14,919
Current Liabilities		1,615		2,172		2,164
Suppliers		910		1,159		1,130
Loans and Financing		51		103		120
Payroll and Related Accruals		33		44		39
Payable Taxes		266		360		475
Other Accounts Payable		355		507		400
Non-Current Liabilities		1,824		2,208		2,419
Long Term		1,824		2,208		2,419
Loans and Financing		724		1,021		1,325
Contingency Provisions		112		107		95
Payable Taxes		28		47		35
Outstanding authorizations		895		922		940
Other Accounts Payable		65		110		23
Shareholders’ Equity		9,059		9,893		10,337

 

 

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6.4) brasil telecom – brt consolidated

R$ mILLION

 

Income Statement		2Q09			1Q10			2Q10			1H09			1H10
Wireline Services Revenues		3,873.2			3,952.3			3,921.9			7,749.4			7,874.2
Local Services		1,601.1			1,577.0			1,597.6			3,232.6			3,174.7
Subscription Charges		956.1			1,017.7			1,058.6			1,919.0			2,076.3
Local Traffic		185.6			144.8			141.6			379.8			286.4
Installation Fees		2.5			13.1			11.0			4.7			24.1
Collect Calls		0.9			0.2			0.2			1.5			0.4
Other Local Revenues		2.9			3.5			3.6			6.0			7.1
Fixed-to-Mobile (VC1)		453.0			397.7			382.7			921.5			780.5
Long Distance		627.3			623.9			540.9			1,323.4			1,164.7
Intra-State		197.8			173.4			163.5			390.1			336.9
Inter-State		57.9			54.1			49.5			113.2			103.6
Inter-Regional		52.4			54.9			43.3			105.2			98.2
International		7.2			7.0			5.9			15.4			12.9
Fixed-to-Mobile (VC2 and VC3)		311.9			334.5			278.6			699.6			613.1
Advanced Voice		33.3			44.2			39.1			65.9			83.3
Public Telephones		116.8			77.4			77.4			201.0			154.8
Additional Services		95.4			110.4			114.3			179.6			224.6
Network Usage Remuneration		81.6			91.5			93.0			164.7			184.6
Data Transmission Services		1,311.6			1,422.6			1,454.3			2,569.6			2,876.8
Wireless Services Revenues		518.4			522.3			553.6			1,019.4			1,075.9
Subscription Charges		107.6			115.4			119.4			213.1			234.8
Outgoing Calls		162.8			147.3			157.6			330.2			304.9
Domestic/International Roaming		3.3			11.0			5.0			6.4			16.0
Network Usage Remuneration		147.6			165.8			173.8			286.6			339.6
Data / Value Added Services		63.4			70.7			76.8			121.6			147.5
Handset Sales		33.7			12.1			21.0			61.4			33.1
Gross Operating Revenue		4,391.6			4,474.6			4,475.5			8,768.8			8,950.1
Taxes and Deductions		(1,743.9	)		(1,836.9	)		(1,888.3	)		(3,353.4	)		(3,725.2	)
Net Operating Revenue		2,647.6			2,637.7			2,587.2			5,415.4			5,224.9
Operating Expenses		(4,302.5	)		(1,770.3	)		(1,791.3	)		(6,601.8	)		(3,561.6	)
Cost of Services Provided		(590.2	)		(484.3	)		(511.1	)		(1,125.2	)		(995.4	)
Cost of Goods Sold		(46.1	)		(11.6	)		(17.6	)		(110.4	)		(29.2	)
Interconnection Costs		(497.0	)		(537.0	)		(460.5	)		(1,010.4	)		(997.5	)
Selling Expenses		(350.0	)		(270.8	)		(250.6	)		(767.2	)		(521.5	)
General and Administrative Expenses		(244.1	)		(263.8	)		(346.4	)		(466.7	)		(610.2	)
Other Operting (Expenses) Revenue, net		(2,575.1	)		(202.8	)		(205.0	)		(3,121.8	)		(407.9	)
EBITDA		(1,654.8	)		867.4			795.9			(1,186.4	)		1,663.3
Margin %		-62.5	%		32.9	%		30.8	%		-21.9	%		31.8	%
Depreciation and Amortization		(496.5	)		(411.5	)		(415.1	)		(992.4	)		(826.6	)
EBIT		(2,151.3	)		456.0			380.7			(2,178.8	)		836.7
Financial Expenses		(187.6	)		(253.7	)		(257.1	)		(397.3	)		(510.8	)
Financial Income		160.8			194.3			209.4			283.5			403.7
Income Before Tax and Social Contribution		(2,178.1	)		396.5			333.1			(2,292.5	)		729.6
Income Tax and Social Contribution		741.6			(96.4	)		(96.3	)		776.6			(192.7	)
Net Income		(1,437.8	)		300.1			236.8			(1,517.4	)		536.9
Margin %		-54.3	%		11.4	%		9.2	%		-28.0	%		10.3	%
Outstanding Shares Thousand (exc.-treasury)		547,719			589,789			589,789			547,719			589,789
Income per share (R$)		(2.625	)		0.509			0.401			(2.770	)		0.910

 

 

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6.4) brasil telecom – brt consolidated (continued)

 

R$ mILLION

 

Balance Sheet		6/30/09			3/31/10		6/30/10
TOTAL ASSETS		17,142			22,828		23,143
Current		6,199			6,128		6,636
Cash		1,297			1,887		2,424
Financial investments		317			450		458
Accounts Receivable		2,092			2,013		1,995
Recoverable Taxes		1,328			1,224		1,140
Inventories		49			31		24
Other Current Assets		1,116			523		595
Non-Current Assets		10,943			16,700		16,507
Long Term		4,071			8,430		8,568
Recoverable and Deferred Taxes		2,169			4,705		4,686
Assets in Escrow		1,427			1,809		1,908
Other		475			1,916		1,974
Investments		80			5		5
Property Plant and Equipment		5,296			6,777		6,458
Intagible Assets		1,495			1,488		1,476
Balance Sheet		6/30/09			3/31/10		6/30/10
TOTAL LIABILITIES		17,142			22,828		23,143
Current		4,847			4,216		4,646
Suppliers		1,362			1,491		1,373
Loans and Financing		957			972		1,263
Payroll and Related Accruals		125			87		133
Payable Taxes		1,007			710		787
Dividends Payable		330			105		104
Other Accounts Payable		1,067			851		986
Non-Current Liabilities		6,849			7,217		6,865
Long Term		6,849			7,217		6,865
Loans and Financing		3,867			3,415		2,938
Payable and Deferred Taxes		548			702		772
Contingency Provisions		933			1,635		1,678
Outstanding authorizations		652			632		644
Other Accounts Payable		849			833		833
Minority Interest		(3	)		0		0
Shareholders’ Equity		5,449			11,395		11,632

 

 

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6.5) 14 brasil telecom – brt mobile

R$ mILLION

 

Income Statement		2Q09			1Q10			2Q10			1H09			1H09
Wireless Services Revenues		626.0			639.1			659.6			1,236.4			1,298.7
Subscription		107.6			115.4			119.4			213.1			234.8
Outgoing Calls		164.3			147.7			158.7			333.3			306.4
Domestic/Internacional Roaming		3.3			11.0			5.0			6.4			16.0
Network Usage Remuneration		253.8			282.1			278.7			500.5			560.9
Data / Value Added		63.4			70.7			76.8			121.6			147.5
Handset Sales		33.7			12.1			21.0			61.4			33.1
Gross Operating Revenue		626.0			639.1			659.6			1,236.4			1,298.7
Taxes and Deductions		(168.8	)		(163.9	)		(178.0	)		(336.1	)		(341.9	)
Net Operating Revenue		457.2			475.2			481.6			900.3			956.8
Operating Expenses		(428.2	)		(423.5	)		(407.7	)		(818.9	)		(831.2	)
Cost of Services Provided		(94.3	)		(121.8	)		(146.3	)		(186.9	)		(268.1	)
Cost of Goods Sold		(22.2	)		(11.6	)		(17.6	)		(50.5	)		(29.2	)
Interconnection Costs		(135.3	)		(159.1	)		(123.6	)		(258.5	)		(282.8	)
Selling Expenses		(156.7	)		(103.7	)		(86.7	)		(290.0	)		(190.4	)
General and Administrative Expenses		(24.2	)		(33.3	)		(36.2	)		(40.8	)		(69.6	)
Other Operating (Expenses) Revenue, net		4.6			5.9			2.8			7.9			8.8
EBITDA		29.0			51.7			73.9			81.4			125.6
Margin %		6.3	%		10.9	%		15.3	%		9.0	%		13.1	%
Depreciation and Amortization		(133.6	)		(68.1	)		(64.8	)		(261.9	)		(132.9	)
EBIT		(104.6	)		(16.4	)		9.1			(180.4	)		(7.3	)
Financial Expenses		(25.1	)		(35.8	)		(37.9	)		(48.0	)		(73.7	)
Financial Income		55.1			39.4			41.1			101.2			80.5
Income Before Tax and Social Contribution		(74.5	)		(12.8	)		12.3			(127.2	)		(0.6	)
Income Tax and Social Contribution		24.4			(18.3	)		(0.4	)		41.3			(18.7	)
Net Income		(50.1	)		(31.1	)		11.8			(85.9	)		(19.3	)
Margin %		-11.0	%		-6.5	%		2.5	%		-9.5	%		-2.0	%

 

 

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Balance Sheet		6/30/09		3/31/10		6/30/10
TOTAL ASSETS		4,648		5,101		4,988
Current		1,638		1,915		1,849
Cash		13		639		491
Financial investments		622		196		198
Accounts Receivable		207		241		237
Recoverable Taxes		181		181		167
Inventories		47		27		16
Other Current Assets		569		631		740
Non-Current Assets		3,010		3,186		3,139
Long Term		1,081		1,156		1,158
Recoverable and Deferred Taxes		760		779		772
Assets in Escrow		0		0		21
Other		321		376		365
Property Plant and Equipment		977		1,179		1,162
Intagible Assets		952		851		819
TOTAL LIABILITIES		4,648		5,101		4,988
Current		605		926		787
Suppliers		301		547		358
Loans and Financing		7		27		37
Payroll and Related Accruals		7		6		6
Payable Taxes		90		88		87
Outstanding authorizations		96		0		105
Other Accounts Payable		103		258		194
Non-Current Liabilities		1,054		1,280		1,293
Long Term		1,054		1,280		1,293
Loans and Financing		311		530		519
Payable Taxes		45		70		81
Contingency Provisions		18		21		23
Outstanding authorizations		648		628		640
Other Accounts Payable		32		31		31
Shareholders’ Equity		2,989		2,895		2,907

R ELEVANT I NFORMATION

I) CVM instruction 358, article 12: The controlling shareholders, direct or indirect, and the shareholders electing members o the Board of Directors or the Statutory Audit Committee, as well as any individual or company, or group of people acting together or representing a similar interest, reaching participation, direct or indirect, of 5% (five per cent) or more of a type or class of shares representing the capital of a public company capital, must inform the CVM, and the Company in accordance with terms of the article.

Oi guides its shareholders to comply with the terms of article 12 of CVM Instruction 358, however it cannot be held responsible for the disclosure of information on acquisition or sale, by third parties, of participation that corresponds to 5% or more of a type or class of shares that represents its capital or that is entitled to rights over these shares and further securities issued.

 

 

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Shares TNE		Capital		Treasury		Controlling Shares		Free-Float
Common		130.611.732		3.020.880		68.504.187		59.086.665
Preferred		261.223.463		6.182.160		0		255.041.303
Total		391.835.195		9.203.040		68.504.187		314.127.968
Shares TMAR		Capital		Treasury		Controlling Shares		Free-Float
Common		107.063.093		0		104.227.873		2.835.220
Preferred (A)		130.487.295		223.500		104.329.417		25.934.378
Preferred (B)		1.063.967		0		6		1.063.961
Total		238.614.355		223.500		208.557.296		29.833.559
Shares BRTO		Capital		Treasury		Controlling Shares		Free-Float
Common		203.423.176		0		161.990.001		41.433.175
Preferred		399.597.370		13.231.556		128.675.049		257.690.765
Total		603.020.546		13.231.556		290.665.050		299.123.940

OBS: Shareholder structure as of june 30, 201

II) This Report contains forecast and/or estimates regarding future events. These projections were carefully compiled based on the present scenario and work in progress, together with the corresponding expectations. The use of forward-looking statements, such as, but not limited to: “project”, “estimate”, “expect”, “predict”, “plan”, “anticipate”, is intended to indicate possible trends that, inevitably, involve uncertainty and risk and whose future results may differ from current expectations. Oi cannot be held responsible for the transactions or investment decisions of third parties based on these forecasts and/or estimates. The information presented has not been audited and may therefore differ from the final audited results.

Oi – Investor Relations

 

Roberto Terziani		55 (21) 3131-1211		rterziani@oi.net.br
Bayard Gontijo		55 (21) 3131-1211		bayard.gontijo@oi.net.br
Marcelo Ferreira		55 (21) 3131-1314		marcelo.asferreira@oi.net.br
Bernardo Guttmann		55 (21) 3131-1316		bernardo.guttmann@oi.net.br
Michelle Costa		55 (21) 3131-2918		michelle.costa@oi.net.br
Patricia Frajhof		55 (21) 3131-1315		patricia.frajhof@oi.net.br
Matheus Guimarães		55 (21) 3131-2871		matheus.guimaraes@oi.net.br
Global Consulting Group
Lucia Domville		1 (646) 284-9416		ldomville@hfgcg.com

 

 

07/29/2010		www.oi.com.br/ir		30

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Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: July 29, 2010