1 ST QUARTER HIGHLIGHTS

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2 Financial Results obile Net Services Revenues (Δ% YoY) 1 ST QUARTER HIGHLIGHTS Consolidated EBITDA (Δ% YoY) Consolidated Net Income (Δ% YoY) +1.4% Business Generated Business Received (TR mpact) 1, % 1, % 372 Incoming Outgoing (Long Distance + Usage) VAS EBITDA argin 26.0% 28.0% EPS (R$) % -22.5% Operational Results Customer Base (mln; Δ% YoY) Postpaid Prepaid %YoY +3.8% +11.9% +2.3% obile Data Users Growth (mln; Δ% YoY) % 27 obile Payback Ratio (SAC/ARPU in months) 1.6x 1.6x 2

3 This image cannot currently be displayed. Average throughput analysis where BB is completed * From To ~ 800 Kbps ~ 2.1 bps Network Additions in the 3G sites: in Q1 (total 9,185) 4G sites: in Q1 (total 2,133) WiFi hotspots: +190 in Q1 (total 904) BB cities: + 14 in Q1 NETWORK EVOLUTION Investments R$613 mln R$470 mln + 30% YoY 4G 4G 2G 3G 2G 3G Number of 3G & 4G Sites ~14,000 Number of Wi-Fi & Small Cell 1,764 R$3.8 Billion in FY14e R$613 mln in ~11, >94% in infrastructure Fiber Infrastructure e e ~19,700 Km ~37,600 Km Number of sites with fiber optic Cities with mobile BB project = 57,300 Km in Fiber +16x 39 etro-areas Backbone e *According to independent analysis of the Netetrics Reports provided by Speedtest.net 3

4 QUALITY IPROVEENTS Claims at Consumer s Protection Agency (Procon) (in thds) other : Claims at Anatel over 1,000 lines Total Complaints Network Complaints Avg. arket Complaints s Quality Plan (#cities) 599 cities (Target for 2014) % 4Q13 Target for 2014e Source: SINDEC-Procon Note: Per economic group Source: ANATEL The least claimed within telcos Consistent performance in PROCON Reducing Anatel complaints in all fronts Network showing remarkable improvements 320 cities under the company s quality plan project in 53% of 2014 target achieved in the first quarter 4

5 Customer Base (mln) CUSTOER BASE EVOLUTION x Vivo Claro % +3.8% +3.7% Leading market growth #1 player in prepaid Oi % #2 player in voice postpaid Austere disconnection policy 1Q12 Source: ANATEL Prepaid Recharge (R$; YoY) Distribution Channel (YoY) ix of Postpaid over total base # Points of Sales: ass Channel (retail) +28% 16.5% +10% 15.3% +121bps # of Own Stores +22% 5

6 Revenues (R$ bln) % of Gross Services 21% Revenues % of Customer 26% 18% 5.9 Base % DATA SERVICES AT A SOLID PACE Users (# mln users) % % Data Gross Revenues +24.6% % % YoY Other VAS services obile Data users % % 27 1Q12 1Q12 3G arket Share (%; mln users) 4G arket Share (%; thd users) 105 mln 2.1 mln 42% 37% 25% 23% 23% 24% % 21% 20% 41% 33% 15% % 13% % 11% 223 2Q13 3Q13 4Q13 2Q13 3Q13 4Q13 Source: ANATEL Source: ANATEL 6

7 Access via obile Broadband Willingness to Pay (% of Households) LEVERAGING ON THE LARGEST COUNITY Huge data opportunity in-house 73.9 million users s Customer Base Snapshot Handset market share (ar/14) 59% of HH: Up to R$30/month Open arket 53% 36% 24% of HH: Up to R$70/month 27 mln data users 36% 46mln potential data users +15 mln with data handset 21% +31 mln untapped market Operators 10% 29% 25% P1 P2 P3 Device sales profile 5% of HH: Up to R$150/month Source: CETIC 2012 Data Offers Prepaid Postpaid 42% Brazil s largest digital music provider >32 mln songs downloaded Source: GFK Group Innovative Services Notebook sales FY2014e: 8.5 mln Tablet sales FY2014e: 11.1 mln Smartphone sales FY2014e: 46.7 mln Protect Chip for soccer fans: free content of soccer teams Ensures safety of customer s devices and information Simple and reliable platform The newest communication app by Provides a new user interface far all communication Source: IDC 7

8 Accelerating Deployment Addressable HH (000 HH) 1,138 Gross Adds (000 users) FIXED BROADBAND: LIVE Customer Base (000 users) % sep/12 mar/14 2Q13 3Q13 4Q neighborhoods: 41 neighborhoods in SP 59 neighborhoods in RJ arket Performance Customer Satisfaction Survey* (Source: TNS Institute Research) P1 P2 General Satisfaction Offer Billing Customer Base ARPU (R$; CAGR %) +15% UBB arket Share (SP + RJ) (connections >34bps) Others 61.1% Fiber 39.9% Conection Quality Call Center Q12 2Q13 3Q13 4Q13 * From Dec/13 to Jan/ Source: TNS Institute Research) Feb/14 Source: Anatel 8

9 INTELIG, NOW POSITIONED AS SOLUÇÕES CORPORATIVAS The Opportunity Ahead s Addressable market (Net service revenues of total addressable market*; R$ bln) Total Voice CAGR % 0.4% with considerable room to increase revenue share (% of fixed corporate market) P5 35% 2% Data VAS e Source: IDC Brazil ICT Business Service Database e 7.4% 9.9% *Companies with more than 100 employees P1 3% P4 21% P3 25% P2 14% Business Remodeling Path 1 arket re-positioning 2 Geographic expansion 3 Better financial performance Intelig now positioned as Net Revenues (with intercompany) Soluções Corporativas Re-structuring of sales force: multi channel approach Re-designed service portfolio Expansion: 2014: 7 new cities 2015: 12 new cities A A Segment EBITDA-CAPEX - + A Actual

10 TR IPACT ANALYSIS TR Cut Path -10% 2012 Avg. TR Price (R$) 0.36 TR Exposure ~ 27% Net Services Revenues ~ 40% EBITDA -11% ~ 20% -25% ~ 14% -33% 2015e Q10 1Q11 1Q12 1Q10 1Q11 1Q12 TR Impact obile Service Net Revenues EBITDA +5.0% +1.4% Impact of ~ R$ 140 mln % +7.6% TR cut impact should be reduced following lower exposure Business generated (outgoing & data) should offset TR impact 10

11 Net Revenues (R$ mln; % YoY) Business Generated: +8.9% YoY Business Received: -22.5% YoY 0% FINANCIAL RESULTS ANALYSIS (+)obile: Efficiency (-)Fixed: Repositioning/new brand +8% EBITDA (R$ mln; % YoY) 4, ,702 1, ,317 Service 4, % 4, % EBITDA argin 28.0% 30.7% Service EBITDA argin 33.2% Handset -3.4% Revenue Δ obile Δ Fixed Δ Handset Revenue Services Services EBITDA Traffic/Data ΔContribution argin ΔHandsets ΔOpex EBITDA ΔYoY +1.4% -22.9% -3.4% ΔYoY +7.0% +37.0% +6.1% Net Income (R$ mln; % YoY) Cash Flow & NFP (R$ mln) % % 372 OFCF 1Q12-1,193-1,374-1,571 1Q12 Non OFCF Net Cash Flow (+) NFP BoP (=) NFP EoP Δ Fistel -1,458-1,706-1, ,899-1,555-1,314 11

12 Solid results in Business Generated: +8.9% YoY EBITDA: +7.6% YoY acro environment highlights Slower macroeconomic growth requires evolution of industry approach Competitive landscape remains intense Regulatory environment: o Upcoming 4G Auction o New consumer regulation framework EBITDA argin: +200 bps YoY Net income: +21.6% YoY World Cup games: airports and stadiums coverage o Wi-fi off loading at aracanã: in recent test 25% of data traffic were off-loaded CONCLUSIONS AND PERSPECTIVES Financial Services: Offer Innovation o Initial commercial launch of a prepaid mobile account / mobile money o A partnership between, Caixa Econômica Federal (federal bank) and astercard o Focus on unbanked population (50% of prepaid base.) New data offers: more options of data cap for prepaid (10 & 30b) Infinity Turbo 7 launch: services package of R$7 per 7 days all in: o Voice + Web + SS 4G included in all data package Continued infrastructure focus Coverage densification: macro and micro coverage enlargement Resilience and network availability Network control (NOC) internalization completed: o onitored elements - more than: 12,000 sites, 70,000 km of fiber, 900 IP network elements, 6,700 transmission equipment and 1,300 SANs Towers: analyzing opportunities to unlock hidden value music included in postpaid packages Live Extreme: new 1Gbps offer Soluções Corporativas / Empresas as renewed positioning of fixed and mobile corporate solutions 12