1

2nd Global Emerging Markets Conference

Deutsche Bank

September, 2003 - NY

2

General Overview

3

HIGHLIGHTS

• Integrated Telecom Service Provider– 14.9 million wirelines in service– 2.2 million wireless clients

• Concession Area (Region I) - Local Service and PCS– 65% of Brazilian territory/94 million people– 40% of country’s GDP– Over 20 million households

• Leadership in local services (97% market share – Region I)

• Domestic and international long distance services

• PCS Mobile services (GSM)

• Data, Corporate & Call Center Services

• Most liquid stock in Brazilian market (TNLP4)• One of Most liquid Latam ADR (NYSE: TNE)

• High Free Float: 80% of total shares/ADR: 27%

• Market value: US$ 4.5 billion

4

SHAREHOLDERS’ STRUCTURE

TelemarParticipações S.A.*

Free float

Free float = 19.2%

100%80.8%

Norte Leste (TMAR)

100% 100%

Tele Norte Leste Participações S.A. (TNE)

*Controlling Shareholder (55% voting shares)

Note: % of holdings excluding treasury stock

5

CAPITAL STRUCTURE

Tele Norte Leste (TNE)

Telemar Participações

Free float

17.9% 79.9%

BNDESPar

Fiago

AG Telecom

ASSECA Participações

L.F. Tel

BrasilCap

Brasil Veículos

Lexpart Part.

Capital

R$ 4,644 million

Common shares

Preferred shares

Total shares

130,186 m

390,557 m

260,371 m

1/3

2/3

Total outstanding shares (ex-treasury)

381,777 m

* 13.1% - Annex IV

Treasury Stock

2.2%

Bovespa

NYSE (ADR/TNE)

6

ORGANIZATION CHART

Fiscal Committee

Board of Directors

TNE

Executive Committee

Internal Audit

Institutional Relations

Asset Management

Strategy & Regulation

Human Resources

Legal Counsel

IT

Billing Cycle

Procurement

Controller

Treasury

Financial Planning

Investor Relations

CFO

Independent Auditors

Disclosure Committee

TMAR

7

PERSONNEL

Fixed & mobile businesses

Contact center

full-time employees

1998 1999 2000 2001 2002 Jun/2003

27,47128,736

31,393

Jul/1998

8

Jul/1998* 1998 1999 2000 2001 2002 Jun/2003

*Company’s acquisition

WIRELINE PLATFORMmillion lines

Lines in service

Lines installed

Universalization goals24% CAGR

9

BROADBAND ACCESS

ISDN

ADSL

thousand lines

Jun/2002

92

19%

81%

Sep/2002

93

23%

77%

Dec/2002

120

42%

58%

Mar/2003

125

47%

53%

Jun/2003

140

59%

41%

Increasing focus on ADSL

10

Natal

Recife

Maceió

RR

AMPA

MA

AC

RO

MT

MS

RS

PR

SP

MGGO

TO

BA

PI

CE

PBPE

Porto Alegre

Florianópolis

Curitiba

Goiânia

Brasília

SE

São Luís

Rio de Janeiro

Vitória

Salvador

Aracajú

Terezina

Fortaleza

Paracatu

Patrocínio

ES

Belém

RN

AL

Uberlândia

SC

Belo Horizonte

São Paulo

Campinas RJ

AP

Montes Claros

• Coverage of 80% of Brazilian Industrial GDP

• Interstate and intrastate transport network

• 18,000 km of fiber optical cables

• 20 integrated metropolitan rings in 18 states

• 350 remote satellite stations

• – 8 Satellite Hubs

• ATM, TDM/SDH and IP Networks

Main features

LONG DISTANCE AND DATA TRANSMISSION NETWORK

International connections

International connections

Rio – location of our Network Operations Center (NOC)

João Pessoa

11

WIRELESS PLATFORM

Prepaid

Post-paid

thousand subscribers

Jun/2002

35

Sep/2002

50222%

78%

Dec/2002

1,401

20%

80%

Mar/2003

1,722

22%

78%

Jun/2003

2,236

20%

80%

Oi – 2.2 million subscribers in just 12

months

12

Oi’s OPERATING & FINANCIAL PERFORMANCE – 2Q03

Net additions - Oi

thousand subscribers

4Q02 1Q03 2Q03

900 321 514

Post-paid

Prepaid

3Q02

500

4Q02 1Q03 2Q033Q02

Net additions – Region I

thousand subscribers

902

470

1,517

1,115

Oi´s market share (net adds)

13

Source: Anatel

Brasil

GSM - Region I Region I

Oi’s MARKET SHARE – JUNE/2003

14

WIRELESS PENETRATION – JUNE/03 % - States in Region I

Brazil - 22%

Region I - 16%

Source: Anatel

15

WIRELESS PROJECT ROLLOUT Oi

• ~ 400 cities covered; 48 million people• GPRS coverage in 6 main capitals• 2,680 sites (BTS)• CAPEX optimization (co-siting: 971 in / 531 out)• International roaming• Main suppliers: Nokia, Siemens, Alcatel, Ericsson

• 1,824 points of sales (breaking exclusivity of A & B band agreements)

• Diversified channels with high capillarity– Retail, specialized agents/dealers, stores, telesales

• Corporate sales effort combined with Telemar

• Tight headcount structure: 933 employees• Infrastructure sharing• Outsourcing (including call centers)• Synergies with Telemar• Strong brand name

Coverage

Distribution

Resource optimization

Coverage focused on profitable areas

Consumer and corporate focus through high capillarity and diversity of channels

Focus on profitable growth, minimizing OPEX and CAPEX

16

1998 1999 2000 2001 2002 1H02 1H03

REVENUE GROWTHR$ million

Gross revenue

Net revenue

23.4% CAGR

+19.8%

*Wireless startup from 2H02

17

1998 1999 2000 2001 2002 1H02 1H03

COSTS & EXPENSESR$ million

17.4% CAGR

+21.3%

*Recurring costs (excluding extraordinary rev. of R$ 153 million /Sistel)

18

EBITDAR$ million

*Recurring EBITDA (ex-Sistel)

EBITDA Margin

1998 1999 2000 2001 2002 1H02 1H03

*

1H0398 99 00 01 02 1H02

*

19

EMPLOYEE PRODUCTIVITY – TMAR

* Annualized

Lines in Service/Employee

+398%

Net Revenue/Employee

R$ Thousand

+541%

EBITDA/Employee

R$ Thousand

+777%

1998 1999 2000 2001 2002

1.604 1.605

1998 1999 2000 2001 2002 1H03* 1998 1999 2000 2001 2002 1H03*

939

1.281

1H03

20

WIRELINE PRODUCTIVITY – TMARR$

Costs & Expenses /ALIS EBITDA/ALISNet Revenue/ ALIS

1998 1999 2000 2001 2002

+14%

-10%

+63%

1998 1999 2000 2001 20021998 1999 2000 2001 2002 1H03* 1H03* 1H03*

*Annualized

ALIS: Average Lines in Service

21

CAPITAL EXPENDITURES (CAPEX)R$ million

Wireline

Wireless

1998 1999 2000 2001 2002 1H02 1H03

447 198378 282

2,500 2,2442,804

10,060

2,031825 480

1H0398 99 00 01 02 1H02

CAPEX/Sales

22

CAPITAL EXPENDITURES (CAPEX)US$ million

1998 1999 2000 2001 2002 Total1H03

23

Quarterly Results

24

GROSS REVENUE BREAKDOWNR$ million

*Wireless startup from 2H02

Wireline

Local (including VC1)

Long distance (including VC2/3)

Network Usage

Data

Public phones

Other

Wireless

Services

Subscription

Outgoing calls

Domestic/inter. roaming

Network usage

Other SMP services

Handset sales

Total Gross revenue

Wireline

Wireless

Contact center

Consolidated net revenue

2Q03 1Q03 2Q02QoQ

Gross revenueYoY

%%%% Change

4,256

2,617

681

317

289

195

158

292

174

43

58

13

52

8

118

4,570

4,256

292

22

3,343

100

61

16

7

7

5

4

100

59

15

20

4

18

2

41

100

93

6

1

4,214

2,592

666

330

271

196

160

219

137

32

52

12

35

6

82

4,453

4,214

219

20

3,218

100

61

16

8

6

5

4

100

63

15

24

6

16

3

37

100

95

5

0

3,764

2,378

464

395

223

159

146

–

–

–

–

–

–

–

3,774

3,764

–

10

2,780

100

63

113

10

6

4

4

–

–

–

–

–

–

–

–

100

100

–

–

1

1

2

-4

7

-1

-1

33

26

34

13

3

47

22

45

3

1

33

6

4

13

10

47

-20

30

22

8

–

–

–

–

–

–

–

–

21

13

0

115

16

*

25

LOCAL SERVICES

2Q03/2Q02 – YoY

Monthly subscription

Pulse

Fixed to mobile(F-M)

Other

Installation

Total 239

2

-22

• Local rate increase (Jun/02)

• F-M rate increase (Feb/03)

+ R$ 239 million

(+10.0%)

2Q03/1Q03 – QoQ

Main drivers

Monthly subscription

Pulse

Fixed to mobile (F-M)

Other

Installation

Total

• F-M rate increase (Feb/03)+ R$ 26 million

(+1.0%)0

-3

35

26

Domestic

International

Fixed to mobile (F-M)

Total

17

LONG DISTANCE SERVICES2Q03/2Q02 – YoY Main drivers

• Market share gains (new services: R$ 86 million), rateincrease and traffic growth

+ R$ 217 million

(+46.9%)

2Q03/1Q03 – QoQ

• DLD: market share gains

• ILD: backlog cleanup/1Q03• F-M rate increase (Feb/03)

+ R$ 15 million

(+2.2%)

Domestic

International

Fixed to mobile (F-M)

Total

-8

27

DATA SERVICES2Q03/2Q02 – YoY

IP

SLDD/SLDA*

EILD*

Packet/frame relay

Other

Total

-16

Main drivers

Market growth, market share gains (new long term contracts) and increasing sales of IP & ADSL services

+ R$ 67 million

(+30.2%)

2Q03/1Q03 – QoQ

IP

SLDD/SLDA*

EILD*

Packet/frame relay

Other

Total

+ R$ 18 million

(+6.6%)

-8

-12

*Leased lines to companies and other telcos

28

WIRELESS SERVICES

2Q03/1Q03* – QoQ Main drivers

Handset sales

Outgoing calls

Network usage

Subscription

Other

Total

• Aggressive growth:2.2m subscribers injust 12 months (514K net adds-2Q03)

+ R$ 73 million

(+33.2%)

*Startup as of 3Q02

1

Handsets

+R$ 37 million

Services

+R$ 36 million

29

COSTS & OPERATING EXPENSES* – 2Q03

2Q02 1Q03 2Q03

R$ million

*Excluding depreciation & amortization

2Q03

1Q03

Cost of services

Interconnection

Selling

G&A/other

Cost of services

Interconnection

Selling

G&A/other

Special sales campaigns

Cleanupof outstanding

payments

30

COSTS & OPERATING EXPENSES – MAIN CHANGES (2Q03/1Q03)R$ million

Interconnection

Personnel

Third Party Services

Handset Costs

Rent/Insurance

Marketing

Provisions for Doubtful Accounts (PDA)

Other Operating Exp. (Revenues)

Total

ItemR$ m %

Change

2Q03 1Q03

TNEComments

621

219

501

156

108

37

152

70

1,864

654

204

475

82

115

16

141

56

1,743

(33)

15

26

74

(7)

21

11

14

121

-5.0

7.4

5.5

90.2

-6.1

131.3

7.8

25.0

7.0

• Backlog cleanup in 1Q03

• Headcount/severance costs/sales commissions

• Dealers’ commissions/consultancy

• Handset sales (+85.7%)

• Lower costs with leased lines

• Marketing campaigns (mothers and valentine days)

• Stable level in spite of macro environment - PDA/Sales: 3.3% (3.2% in 1Q03)

• Lower infrastructure rental revenues

31

PROVISIONS FOR DOUBTFUL ACCOUNTS% of gross revenue

2Q032Q02 3Q02 4Q02 1Q03

32

EBITDAR$ million

*Startup of wireless business

EBITDA Margin

2Q02 3Q02 4Q02 1Q03 2Q03

2Q02 3Q02 4Q02 1Q03 2Q03

*

33

FINANCIAL RESULT – 2Q03

Financial revenues

Financial expenses

Interest on loans/debentures

Monetary & exchange variations

Banking Fees & contingencies

Premium amortization, PIS & Cofins

Other

Net Financial result

1Q03 2Q03

R$ million

133

(586)

(265)

(164)

(108)

(31)

(18)

(452)

134

(651)

(232)

(220)

(126)

(29)

(44)

(518)

Interest on currency swaps (+R$ 54 m);

Restatement of provisions & liabilities (+R$ 29m)

34

DEBT POSITION

Total Debt

• Short term

• Long term

(-) Cash

(-) Long term financial invest.

(=) Net debt

Jun/02 Dec/02 Mar/03 Jun/03

R$ million

9,700

1,220

8,481

(573)

–

9,128

10,774

1,769

9,006

(1,513)

(141)

9,121

11,616

2,053

9,563

(1,479)

(132)

10,005

11,394

2,264

9,130

(1,789)

(86)

9,519

A 5% reduction in 2Q03

35

DEBT PROFILE – CURRENCY & INTEREST (JUNE/03)

Currency Interest index

Local*

2%

US$

CDI

2%TJLP**

Libor

* After currency swaps** BNDES long term lending rate (12% p.a.)

36

DEBT REPAYMENT SCHEDULE (JUNE/03)R$ million

20072H2003 2004 2005 2006 2008 2009+

Total debt = 11,394

% of total 9.7 20.5 21.2 27.3 9.1 4.5 7.7

FC:8,306

LC:3,088

37

CAPEXR$ million

Wireline

Wireless

2Q02 3Q02 4Q02 1Q03 2Q03

2Q02 3Q02 4Q02 1Q03 2Q03

386

509

697

185

295

CAPEX/SALES

38

CASH FLOW: EBITDA & CAPEX

2Q032Q02 3Q02 4Q02 1Q03

1,311 1,260

1,476 1,479

1,285

R$ million

EBITDA

CAPEX

EBITDA (-)

CAPEX

39

Growth Strategy & Outlook 2003

40

Local Wireline

Wireless (GSM)

Data & Corporate

Long Distance

Integrated Offer of Telecom

Services

GROWTH STRATEGY

41

Data & corporate

Long distance

Wireless services

Local service

• Leadership in home market

• Advanced voice services (corporate/middle market)

• Increase ARPU (V.A. Services)

• Reduce interconnection costs (F-M)

• Customized Offer (Regulation)

WIRELINE LOCAL SERVICESPlatform and traffic growth (GDP/Regulation)

42

Local service

Data & corporate

Wireless services

Long distance

LONG DISTANCE SERVICESNew services (increase market share): DLD, ILD and SMP(mobile)

• Leadership in home market

• Retail – loyalty/retention programs + promotions

• Corporate – best quality (call completion/billing) + competitive service plans (discounts/volume)

• Conquer new markets (domestic/international/SMP)

• Leverage on relationship & brand

• Increase efficiency & quality (low cost + high quality service provider)

• Avoid price wars

43

Local service

Long distance

Wireless services

Data & corporate

DATA & CORPORATE SERVICESGrowth above market average (market share gains)

• Increase penetration in SME (home market)

• ADSL (high end residential/so-ho/small businesses)

• Nationwide services (corporate level)

• Best Service Provider (quality end to end / SLA)

44

Local service

Data & corporate

Long distance

Wireless services

WIRELESS (GSM)Aggressive growth / Enhance competitive position

• Market segmentation/innovative plans (MTV & Celebrities/Oi Family)

• Streamline product portfolio

• Leverage on competitive advantages: GSM, regional coverage, synergies with Telemar

• Optimize distribution channels

• Positive EBITDA in 2004

45

OUTLOOK 2003

• Network– Wireline ~ 14.9 million lines in service– Wireless ~ 3.0 million subscribers

• Revenue drivers– Mobile, DLD and Data– Rate increases (2H03)

• Net debt ~R$ 8.5 billion (2003 YE)

• Bad debt ~3.8% of annual gross revenues

• EBITDA Margin in the mid- 40’s

• Capex ~R$ 1.7 billion for 2003

46

“SAFE HARBOR” STATEMENT

Investor Relations

Rua Humberto de Campos, 425 / 8º andar

Leblon

Rio de Janeiro -RJ

Phone: ( 55 21) 3131-1314/1313/1315

Fax: (55 21) 3131-1155

E-mail: invest@telemar.com.br

Visit our website: http://www.telemar.com.br/ri

This presentation contains forward-looking statements. Statements that are not historical facts, including statements about our beliefs and expectations, are forward-looking statements and involve inherent risks and uncertainties. These statements are based on current plans, estimates and projections, and therefore you should not place undue reliance on them. Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update publicly any of them in light of new information or future events