BrTGSM General Office

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Brasil Telecom GSM announces launch of wireless operation

Press Conference

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AGENDA

CoverageCoverage

FixedFixed--Mobile Convergence StrategyMobile Convergence Strategy

Examples of launch offersExamples of launch offers

Distribution channelsDistribution channels

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AGENDA

CoverageCoverage

Fixed-Mobile Convergence Strategy

Examples of launch offers

Distribution channels

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Brasil Telecom GSM Coverage

BrTGSM chose the GSM technology

because it is the most modern in the

market.

More than 600 localities will be covered

in 2004, besides the main highways,

serving more than 30 million people

(82% of the total) in its operation

area.

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Network infra-structure:

� More than 1,700 sites in the launch

� Largest GSM coverage in the region by the end of 2004

� Main partners: Alcatel and Ericsson

Brasil Telecom GSM Coverage

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AGENDA

Coverage

FixedFixed--Mobile Convergence StrategyMobile Convergence Strategy

Examples of launch offers

Distribution channels

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Convergent integration of telecommunications services

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The integration of telecommunications services can happen in three different levels

Integration levels

Network integration� Full integration level of transmission

systems, switching platforms and network elements, with full integration of systems to support the operation

� Integration of systems and infra-structures is clearly easier for start-ups that foresee integration, and not for operators with existing equipments

� Final objective of a full integration of platforms will be reached in the transmission of switched networks to IP networks

Integrated transmissionIntegrated transmissionIntegrated switching platformsIntegrated switching platformsCommon Operating Supporting SystemsCommon Operating Supporting Systems

Network

Handsets and services integration� Integration level sharing services with

existing infra-structure

� Handset integration (fixed and mobile)

� Service integration based in an intelligent network platform, which allows for the delivery of a package of common services (e.g. solutions of personal numbers, home zone services, mobile VPN and mobile Centrex)

� Business units with increased need of unified management

Integrated IN platformsIntegrated IN platformsSingle handset (Single handset (wirelinewireline and wireless)and wireless)Integrated services:Integrated services:

•• Single telephone numberSingle telephone number

Handsets and services

Commercial integration� Integration level solely commercial, i.e.

integrated sales and customer care

� In many cases it happens through partnerships between different operators

� Main goals are convenience (one-stop-shop), a single bill and the possibility of discounts

� Business units relatively independents

Packages and bundlesPackages and bundlesSingle billSingle billOne stop shopOne stop shop

Complexity in

creases

Commercial

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The Only One to Have – “A Única que tem”

Brasil Telecom GSM is TheOnly One to Have Fixed-Mobile convergence in Brazil

All the completely new, singular and exclusive services can be easily identified by our consumers, by the Stamp: The Only One to Have

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AGENDA

Examples of launch offersExamples of launch offers

Distribution channels

Coverage

Fixed-Mobile Convergence Strategy

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Examples of launch offers

We will present two offer examples based on fixed-mobile convergence, creating concrete benefits to the end customer.

They are:

� “Único” – Unique

� “Fale por menos” – Talk for less

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“Único” – Convergent pre-paid of BrTGSM

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““ÚnicoÚnico” (Unique)” (Unique)

By dialing a toll free number (0800), BrTGSM clients are able to complete calls from the wireline network

The total balance of credits can be freely used in any of the accesses (fixed/mobile/public phones)

By dialing a toll free number (0800), BrTGSM clients are able to complete calls from the wireline network

The total balance of credits can be freely used in any of the accesses (fixed/mobile/public phones)

VirtualCredits

R$ 30.00

UsesR$ 0 a 30.00

R$ 30.00

UsesR$ 0 a 30.00

BuyR$ 30.00

Service0800

Convergent pre-paid: Fixed + GSM + Public phones

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Brasil Telecom GSM pre-paid is Unique (“Único”), because:

It is the only operator that:

� Allows credits to be freely used in public phones and fixed

terminals with lower tariffs than the pre-paid plan;

� Includes SMS credits every time you buy a calling card (of any face

value);

� Unique and singular round calling cards;

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Promotion: “Fale por menos” (Talk for less)

Today a local call from a Brasil

Telecom fixed terminal to

another Operators’ mobile

phone costs approx. R$ 0.678*

Brasil Telecom

fixed terminal

A local call from a Brasil Telecom

fixed terminal to a Brasil Telecom

GSM mobile phone will cost

approx. R$ 0,4068*

66% more expensive

Pay less calling Brasil Telecom GSM!

Pay less calling Brasil Telecom GSM!

The cost of a local call from a Brasil Telecom fixed terminal to another Operators’ mobile phone will remain at least 60% more expensive.

The cost of a local call from a Brasil Telecom fixed terminal to another Operators’ mobile phone will remain at least 60% more expensive.

* Reference DF – regular time

Operator A

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Pay Less - Elasticity

• The graph shows the results of

the research about the reduction

of fixed-mobile tariff attractiveness

• From 30% onwards the

difference becomes significant for

more than 70% of clients.

• Brasil Telecom GSM will offer at

least 60% to its clients.

• The graph shows the results of

the research about the reduction

of fixed-mobile tariff attractiveness

• From 30% onwards the

difference becomes significant for

more than 70% of clients.

• Brasil Telecom GSM will offer at

least 60% to its clients.

60

Discounts (%)

Clie

nts

Clients=0.0605344+0.0491557Discount-0.0012139 Dscount**2+0.0000103Discount**3

S=0.0365898 R-Sq=93.2% R-Sq(adj)=89.1%

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AGENDA

Coverage

Fixed-Mobile Convergence Strategy

Examples of launch offers

Distribution channelsDistribution channels

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Distribution channels

BrTGSM distribution channels structure in the launch:

� BrTGSM flagship stores 16

� Shopping center BrTGSM flagship kiosks 40

� Exclusive dealers 400

� Exclusive and non-exclusive retailers 1.350

TOTAL Points of sale of BrTGSM……………………1.806

Kiosks

Integrated Corporate Sales ForceIntegrated Corporate Sales Force

Agents

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Convergent Customer Care

The stores and the call center will serve the complete telecommunication services portfolio of Brasil Telecom, both for sales as well as for customer care.

The stores and the call center will serve the complete telecommunication services portfolio of Brasil Telecom, both for sales as well as for customer care.

� The convergent customer care is another exclusive and pioneer initiative of our operation. � Brasil Telecom GSM flagship stores were developed following theone-stop- shop concept. � The stores are spacious, with around 200 m², where the clients find all Brasil Telecom services:

� wireline and wireless telephony, � intelligent services, � broadband and narrowband internet, � alternative packages of DLD and ILD tariffs, � wireline and wireless telephony accessories, etc.

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Shopping Center Kiosks – Direct Channel

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Kiosk – Mobiles on Display

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Exclusive Dealers