teleco.com.br

02/25/2011

In this page : Basic information about Vivo and annual results.

Company

Vivo is a joint venture controled by Telefonica (50%) and Portugal Telecom (50%) established in december 2002 from 7 cellular providers in the Bands A and B.

These providers correspond to 5 companies listed in the stock exchange of São Paulo and New York: Telesp Celular Participações S.A., including Global Telecom; Tele Centro Oeste Participações S.A., including NBT; Tele Leste Celular Participações S.A.; Tele Sudeste Celular Participações S.A. and Celular CRT Participações S.A.

In 2007, Vivo acquired Telemig Celular getting its control in Apr/08.

www.vivo.com.br

Telefonica purchases Portugal Telecom's participation at Vivo

On July 2010, Telefonica reached a deal with Portugal Telecom (PT) to purchase PT's stake at Vivo for € 7.5 billion.

On September 23 2010, Anatel approved this acquisition, however, imposed the following commitments to Vivo/Telefonica:

Cover, with GSM, 35 cities with no access to this service, 16 of them until March 2011 and the others 19 until December 2011;
Cover, with 3G, 83 cities, besides those 2,832 cities already already established, until December 2012
Assign transmission capacity, in optical fiber or high speed, to be used (no commercially) by the National Education and Research Network (RNP), which enables the interconnection between public universities set in the state of São Paulo.

Companies must submit periodic reports about the accomplishment of these commitments.

On 09/27/10, Telefonica paid the first installment (€ 4.5 billion), other payments will be done on 12/30/10 (€ 1.0 billion) and on 10/31/11 ( € 2.0 billion).

Telefonica became Vivo's controller and able to promote the integration of its fixed and mobile operations in Brazil.

Telefonica also confirmed carring out an auction (OPA) for the acquisition of Vivo's ONs for 80% of the price paid to Portugal Telecom.

By this acquisition, Telefonica

Acquisition History

The process started in 2007. Telefonica made the following propposals to PT:

Jul/07: €3.0 billion
Jan/10: €5.7 billion
Jun/10: €6.5 billion
06/29/10: €7.15 billion

The last proposal made by Telefonica was approved by 74% of those who attended the shareholders' meeting on 06/30/2010, but it was vetoed by the Portuguese government which has Golden Share at PT. The Golden Share assures the Portuguese government the right of veto.

On July 8th, the European Union court decided that Portuguese Government's Golden Share judge at PT is illegal. By that, the negotiation between PT and Telefonica was resumed.

Telefonica prepared itself to request the dissolution of Holding Brailcel. So, the company could take control over Vivo by purchasing shares in the stock market. Portugal Telecom opened negotiations to buy stake at Oi using the resources from Vivo's sale.

On July 27th, Portugal Telecom closed the deal selling to Telepfonica its stake at Vivo for € 7.5 billion and announced an agreement to break into Oi.

Consult Teleco's commentary

Coverage

Vivo reached national coverage in 2009, using frequencies in Band L acquired in an auction in 2007 in order to cover the Northeast of Brazil and the region of Franca (in the states of São Paulo).

Technology

Vivo's main technology was CDMA, but the company implemented a GSM network which statrted operating in 2007 and became the main technology in 2008.

WCDMA/HSDPA is the technology adopted for 3G (more details), despite having an EVDO network with limited coverage which might be terminated in the future.

Thousands	2007	2008	2009	2010	∆Year
Mobile Accesses	37,384	44,945	51,744	60,293	16.5%
Net Adds	4,896	7,561	6,799	8,549	25.7%
% Prepaid	81.1%	81.0%	81.1%	79.0%	(2.5%)
ARPU (R$)	30.1	29.2	27.2	25.2	(7.4%)
MOU (minutes)	76	87	92	116	26.1%
Monthly Churn	2.4%	2.6%	2.5%	2.7%	8.0%
SAC (R$)	102	80	79	64	(19.0%)
GSM subscribers	12,486	30,383	43,500	52,937	21.7%
Employees	8,423	8,386	10,598	13,419	26.6%

R$ millions	2007	2008	2009	2010	∆Year
Gross Revenue	19,576	22,212	23,068	25,717	11.5%
Net Revenue	13,854	15,819	16,637	18,106	8.8%
EBIDTA	3,546	4,868	5,224	5,832	11.6%
EBITDA Margin	25.6%	30.8%	31.4%	32.2%	-
EBIT	843	1,837	1996	3050	52.9%
Net Profit (Loss)	(100)	390	878	1,894	115.7%
Investments	2,162	2,818	2,330	2,489	6.9%
Net Debit	2,089	5,302	3,825	1,744	(54.4%)

04/13/2003	Vivo is launched on the market
04/25/2003	Telesp Celular acquired the control of TCO (Tele Centro Oeste S.A.)
12/04/2005	Vivo announced the incorporation of Tele Leste Cel., Tele Sudeste Cel. and CRT by TCP. The incorporation was accomplished in 02/22/2006
05/02/2006	New fase of reorganization announced: with incorporation of the operators by Global Telecom.
07/20/2006	The Administrative Council of Vivo approved the construction of a network GSM/EDGE scalable to WCDMA, to be increased to its actual CDMA network, whoch will continue working and in expansion. The investment foreseen to the implantation of these network is R$ 1.080 thousands.
July/2007	Telefonica offered US$ 4,1 billion for Portugal Telecom's participation in Vivo. PT didn't accept the offer.
08/03/2007	Vivo announced the purchase of Telemig and Amazônia Celular
April/08	Vivo assume the control of Telemig Celular