A Quarter in Few. 3Q13 YoY 6M13 YoY. Financial. 3Q13 YoY 6M13 YoY. Operational 5, % 9, % Total Revenues. Service 4, % 8,152 1.

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2 A Quarter in Few Financial YoY 6M13 YoY R$ Million Total Revenues Service VAS Handset EBITDA CAPEX 5, % 9, % 4, % 8, % 1, % 2, % % 1, % 1, % 2, % 1, % 1, % Operational YoY 6M13 YoY Postpaid (mln users) % % MOU (min) % % ARPU R$ % R$ % 2

3 Network Check Point: Mobile BB Plan & Backhauling Backhauling Evolution Key Steps for Improvement: MBB/FTTS Project POP MW POP MW Own fiber reaching ~85% of antennas at major cities. BSC-RNC Site Targeting 38 main cities till year end. POP MW FTTS: From 2-8 Mbps link to +100 Mbps. POP MW POP MW Caching, Peering, Web Acceleration. Macro coverage fine tuning for mobile broadband. Results for Recife Our 1 st out of 38 cities Downlink throughput (Kbps) MBB Coverage 4x Q2 Q3 2,394 TIM 1,660 Market Average Source: TIM Apr/13 Sep/13 3G (HSPA) MBB (HSPA+ DC) 3

4 Network Check Point: Backbone Evolution HLR Resiliency Amazon Fiber Backbone Boa Vista Macapá Project Details: Manaus Jurupari Belém Tucuruí Fortaleza ~R$200 million Increasing number of HLR Centrals. From 3 to 8. Maceió Porto Velho Cuiabá Salvador Rondonópolis Brasília Goiânia Belo Horizonte Campo Grande Vitória Rib. Preto Rio de Janeiro Umuarama São Paulo Curitiba Santa Maria Florianópolis Porto Alegre Existing network Network in construction LT Amazonas network 27 cities 1,757 km Capacity: 75 x 100 Gbps PURE MOBILE INFRASTRUCTURE 2009 INTELIG ACQUISITION 2011 ATIMUS ACQUISITION RJ & SP 2013 FIBER TO THE AMAZON 2016 MASSIVE LD BACKBONE Fiber Timeline 0 KM of FIBER + 15,000 KM of FIBER 20,500 KM of FIBER 46,000 KM of FIBER By YE13 65,000 KM of FIBER 4

5 Operational Performance (1/2): Base Evolution & Quality Indicators Customer Base Evolution (Million lines; Source: Anatel; TIM) Post Paid D% YoY +5% +16% Mix of Post Paid (%; Source: Anatel) 14.8% 4G Update (Lines; Market Share; Source: Anatel) 29% Market Share Pre Paid % 16.4% 29% 26% 20% 23% May/13 Jun/13 Jul/13 Aug/13 4Q12 1Q13 2Q13 Prudent strategy in the auction & efficient roll-out paying-off Anatel IDA - Index of Caring Performance Customer Care Performance (Points; Complaints over 1000 lines; Average monthly claims. Source: Anatel (last reported); SINDEC) Anatel Complaints ,192 7,075 4,176 2,961 2,722 Claims at Consumer s Protection Agency (SINDEC - Procon) 6,692 4,518 3,801 Jun-12 Oct-12 Feb-13 Jun-13 Jun-12 Oct-12 Feb-13 Jun-13 4Q12 1Q13 2Q13 TIM P1 P3 P4 5

6 Operational Performance (2/2): Strong Efficiency Gross Additions (Million lines; Source: TIM) SAC* & SAC/ARPU (R$/gross adds; months) Bad Debt (R$ Million; % of Gross Revs.) Commercial % 9.7 SAC/ ARPU (months) SAC (R$) % of Gross 1.1% 0.7% 33.6 Revs. -9% % Bad 56 Debt Total Traffic Leased Lines Costs (Bln minutes) (R$ million) Network % % *Subscriber Acquisition Cost 6

7 Marketing: Keeping the Innovative Approach Liberty Controle Express Chip Torcedor Young Pushing on Postpaid migration Payment via credit card TIM SIM blister for each team. Increase Stickiness Young segment positioning Member get member through social network since Recent Past ~7x 14 Teams alread sponsored +56% jan/13 sep/13 sep/12 sep/13 VOICE DATA Recarga Troco International LD Infinity Web + SMS TIM Music Nonstop Innovation Talk unlimited on-net for R$2 for 2 days. Capture extra charge. Leveraging on micro recharge on physical PoS. Up selling approach, targeting only customer base. US:R$0,20/min. + 8 countries: R$0,50/min FMS initiative. Capturing the unexplored mobile international calls market. Market attended Today through fixed carries. Internet + unlimited SMS on/off-net. Pay per day. Combining Web and SMS offers. Cross selling WEB and SMS. Unlimited download. Pay R$0.50/day. Over the top service. Increase customer stickiness. Network friendly. 13 million songs already downloaded. 7

8 Marketing: Smartphone Supporting Data Growth Smartphone Sales (% total handset sale) 42% 30% 28% 4Q12 46% 19% 35% 1Q13 46% 24% 30% 2Q13 57% 21% 22% 67% 13% 21% Smartphone Webphone Essencial Smart/Web phone Penetration (% over total base of lines) 52% 50% 46% 43% 39% 4Q12 1Q13 2Q13 Jul 13 Smartphone approach to support data usage growth. EBITDA neutral. No subsidy Policy! Leadership position in market of handset () 39% market share of smartphones sold Data Users (% of Data Users in CB; million users) 29% 34% % 24.5 VAS Revenue Growth (% of Mobile Services Gross Revenues; R$ Million) VAS/Revs. 19% VAS Gross Revs. 1, % 23% 1,362 Launching entry-level 3G tablet Devices Share at Sales 56% 46% Notebook 44% 36% Tablets 17% Desktop

9 Live TIM: Maintaining the High Speed Mode Net Adds Customer Base Accelerating sales and improving ARPU; (000 Clients; Source: TIM) (000 Clients; Source: Anatel) 42.6 Taking the lead as #1 challenger in Rio and São Paulo; Reference as UBB service provider ( >50% net share) x Q12 1Q13 2Q13 4Q12 1Q13 2Q13 Network Evolution (000 Addressable Households ; Source: TIM) Clients highly satisfied Source: TNS Market Research Market Share SP+RJ (August) (UBB >34MB ; Source: Anatel) P1 P2 TIM General Satisfaction Offer Bill 6,9 7,2 7,3 7,5 8,0 8,3 8,0 9,0 9,1 GVT 7.1% VIVO 22.0% OTHER 5.6% LIVE TIM 48.5% 38 neighborhoods in SP 34 neighborhoods in Rio Conection Quality 7,5 7,9 8,7 4Q12 1Q13 2Q13 Phone Attending 6,9 7,7 6, NET 8.9% OI 7.8% 9

10 Thousands Financials: Evolution Analysis Net Revenue Evolution EBITDA Analysis (R$ Million, % YoY) 4, % ,083 (R$ Million) 1, % ,252 Service 4, % 4, % EBITDA Margin 25.3% 24.6% 31.0% Service EBITDA Margin 31.5% 30.5% Handset % 876 Revenue Δ Mobile Services Δ Fixed Services Δ Handset Revenue EBITDA ΔServ. Revs ΔHandset Margin ΔMkt and Sales ΔNetwork and ITX ΔPers./G&A and others EBITDA ΔYoY +3.9% -22.3% +40.9% ΔYoY +2.6% -55.2% +10.4% -0.7% +1.2% From EBITDA to Net Income (R$ Million) 3,708-2,045 : R$315 mln -15.6% YoY 1, ,007 EBITDA 9M13 Depreciation/ Amortization EBIT Net Financial Result Taxes and Others Net Income 9M13 ΔYoY +3.4% +2.2% +4.9% +48% -1.9% +2.1% 10

11 Financial Position Capex (R$ Mln) ~94% in infrastructure D Working Capital (R$ Mln) 1, % % 252 LT Amazonas +139% % 413 3Q11 3Q11 OFCF (R$ Mln) D OFCF YoY: +R$471 Net Debt (R$ Mln) 1,314 1,458 1,550 1, % 252 LT Amazonas % 1,194 3Q11 Net DEBT / EBITDA (trailing 12m) 3Q

12 Conclusions

13 Conclusions & Outlook Infrastructure Strategy & Offer Evolution Efficiency Continuous deployment of fiber to support data traffic growth. FTTS will now reach 38 cities by YE2013 from 14. New backbone routes to increase resilience. Signed first vendor agreement on small cell coverage to improve network access and quality. Continuous improvement in network related complaints. Finalized implementation of new call center and data center architecture. Accelerated Capex. Postpaid continuous growth, better customer mix. Maintaining solid data services growth. Continuous offer evolution backed by innovative DNA. International calls. Infinity Web + SMS. Recarga Troco - Change top-up. +70% of smartphones over new sales. Good progress on Intelig and Live TIM. Commercial side: Low SAC. Payback (SAC/ARPU) under control. Bad debt stable at low levels. Network side: Increasing MOU with stable leased lines costs. Proprietary infrastructure deployment. Triennial Plan to be disclosed on November 8 th. 13