0. Brasil Telecom Corporate Overview
November/2006

1. Summary Company outlook Convergence What is converging with what1
Company outlook
Convergence
What is converging with what
Convergence and Brasil Telecom
Brasil Telecom’s steps towards convergence
Final Comments 2 3 4 5 6

2. Company outlook - Our Footprint1
Company outlook - Our Footprint
Largest Telecommunications Company in Region II
Gross Revenue US$ 6,4 billions
9.4 million lines in service (LIS).
2.8 million mobile accesses (launched out/2004).
1.2 million broadband subscribers.
3.5 million active Internet clients.
Metropolitan access networks in São Paulo, Rio de Janeiro and Belo Horizonte.
Offers integrated services via 2 ring-system of fiber-optic subsea cables with 22,000 km connecting Brazil, United States, Venezuela and Bermudas.
Region II
24% of the Brazilian population
44 million inhabitants and
27% of the country’s GDP (R$420 billion)
1 All information is referent to June 2006

3. Finance, HR, Marketing, Operations Technology (Network/IT)1
Company outlook - Integrated Portfolio
Brasil Telecom
Mobile
Service
Cyber
Data Center
Internet
Dial-up
Access
Portal
Broadband
Data
Broadband
DLD / ILD
Local
Finance, HR, Marketing, Operations
Technology (Network/IT)

4. Company outlook - Mobile Telephony1
Company outlook - Mobile Telephony
3,051 thousand mobile accesses in 3Q06
11.4% of market share and 31% of pos-paid accesses.
(thousand)
Accesses
3,051
2,772
2,460
2,213
1,676
Pos-paid
Pre-paid
Pos-paid %

5. Company outlook - Broadband1
Company outlook - Broadband
Data Communication Services accounts for 16% of the total revenues.
ADSL revenue accounts for 43.9% of total data communications revenues.
14.5% penetration of LIS.
ADSL Accesses
(thousand)
CAGR (01-05): 133.7%
+40.4% x 3Q05
Net Additions
CAGR (01-05): 168.8%
Gross Revenue
(R$ million)
+50.2% x 3Q05

6. Company outlook - EBITDA (R$ million)1
Company outlook - EBITDA (R$ million)
Reduction of Operating costs and expenses.
Affected by increase in revenue in the data and mobile segments.
Quarterly
Year (accumulated)
EBITDA Margin

7. Company outlook - Strategic Key Messages1
Company outlook - Strategic Key Messages
Defend fixed-line segment: >70% of revenue;
Expand mobile operations: adequate scale vs. profitability;
Exploit growth opportunities in Data and Internet: increase in revenues and profits;
4. Full convergence: Opex reduction, Capex reduction, churn reduction and ARPU increase;
5. Operational Efficiency;
6. Corporate Governance culture: transparency, ethics and shareholders’ value creation.

8. Can be hard to increase the added value beyond initial benefit2
Convergence
Can be hard to increase the added value beyond initial benefit
Customer Benefit / Value
Level of integration
The Bundles
Source: Ovum

9. Reduce costs, increases coverage and therefore usage2
Convergence
Reduce costs, increases coverage and therefore usage
Customer Benefit / Value
Level of integration
Network
The Bundles
Source: Ovum

10. New applications delivered in new ways to new devices2
Convergence
New applications delivered in new ways to new devices
Customer Benefit / Value
Level of integration
Services
Network
The Bundles
Source: Ovum

11. Simplifies service delivery for both Service Provider and Customer2
Convergence
Simplifies service delivery for both Service Provider and Customer
Customer Benefit / Value
Level of integration
Devices
Services
Network
The Bundles
Source: Ovum

12. 2
Convergence
The maximum level of convergence perceived by the customer occurs when an unique access device can be used for all services and applications available (fixed, mobile, internet, TV, etc).
Customer Benefit / Value
Level of integration
Devices
Services
Network
The Bundles
Source: Ovum

13. Convergence is complex and is happening in the following levels:3
What is converging with what
Convergence is complex and is happening in the following levels:
Network and Information Technology (IT)
Industry sector
Services

14. What is converging with what Network technology & IT 3
Network convergence happens when operators move to an All-IP-Next Generation Network (NGN) to support all telecom traffic efficiently
SDH
Source: Ovum

15. What is converging with what Network technology & IT 3
As operators move to a multipurpose NGN’s, the IT systems that support each service and overlay network are integrated into one OSS/BSS system
SDH
Source: Ovum

16. What is converging with what Industry sector 3
The former distinct worlds of telecommunications and IT are already merging. We also see that the distinctions between fixed & mobile operators, carriers & service providers and media & telecom are blurring
Fixed operators: some are already offering fixed-mobile convergent services, entering the markets previously served by mobile operators;
Mobile operators: announced plans to offer content / TV services. Some companies are now offering football video clips to mobile handsets;
Media providers: have purchased a number of companies designed to create new distribution channels to theirs content. Some ISP plan to offer VoIP and TV services;
IT and software companies: argue that will inevitably be part of the convergent solutions market, particularly providing solutions for the home and office because of the ubiquity of their product; (e.g.. IPTV middleware)
Content owners: search an opportunity to identify new channels to market their existing content. These companies see IPTV as a new channel to increase the film’s life time by adding “on-demand” facility.

17. What is converging with what Industry sector 3
Industry sectors are converging with adjacent sectors around the edge and in the middle. Hence the boundaries & differences between each sector in the convergent space will be difficult to detect.
Source: Ovum

18. What is converging with what Services 3
Convergent services – User perspective
Video
Voice
Mobility
Data
Integrated selling and customer relation services (One Stop Shop)
One bill
Reduction on the cost of services

19. What is converging with what Services on Broadband 3
Fixed voice, data and video services are converging, enabling bundles
Communication
VoIP
Video Telephony
Mobility PC
VPN
Firewall
Parental discretion
Amusement
Video on demand
Music on demand R á
dio
via Internet
Monitoring
Security, home
surveillance and
health monitoring
Personal Computer
Entertainment

20. What is converging with what Fixed – Mobile Services3
A dual mode mobile handset that acts as a normal GSM phone outside the home, inside the home, routes calls through a device called access point connected to conventional fixed line

21. Integrated management of the client Agile and flexible OSS/BSS4
Convergence and Brasil Telecom
The new scenery demands a infra-structure with specific characteristics:
Agnostic to devices
Flexible
Adaptable
Integrated control
Integrated management of the client
Agile and flexible OSS/BSS

22. 4
Convergence and Brasil Telecom
The possibility of service convergence (SoIP) and network convergence stimulates the adoption of IMS architecture.
The future is the implementation of a totally integrated network, all-IP, based on TISPAN architecture (Telecoms & Internet converged Services & Protocols for Advanced Networks).

23. Convergence and Brasil Telecom - Network Evolution4
Convergence and Brasil Telecom - Network Evolution
NGN
Data
GSM e
EDGE
PSTN
Mobile NGN
(3GPP Rel4)
IMS/
TISPAN NGN

24. Convergence – Architecture Today4
Convergence – Architecture Today
Applications
and Services
HLR AS AS AS AS
SCP
SS7
Internet
Internet
Internet
SS7
Internet
SMSC
AAA
BRAS/AAA
BRAS/AAA
BRAS/AAA
Core nNetwork
and Control
GGSN
PLMN
Internet
Internet
PSTN
Headend
SSP
LOCAL
SGSN
DSLAM
CMTS
MSC
Access CM
BSC
BSC
Access Router
Modem xDSL
Wi-Fi AP
GSM
GPRS
WiFi
xDSL
POTS
CMTS

25. 4 Convergence - NGN Application Control Media PSTN IP Transport Access
Application Servers IP
Corporate
Residential

26. Messenger and Media Stream4
Convergence - IMS
Business
Applications
VAS e IN
Presence
Mobilility
Convergence
Flexibility
Confort
Otimization
New Services
Etc.
Messenger and Media Stream
Push-To-Talk
Games
Etc.
IP Multimedia Subsystem
Billing
Security
QoS
IP Network
SBC
MGCF
PGF
MGW/SGW
SGSN/GGSN
DSLAM
CMTS
LOCAL CM
BSC
BSC
Access Router
Modem xDSL
Wi-Fi AP
Access Point
Bluetooth CTP
Seamless
Mobility
GSM
GPRS
WiFi
xDSL
POTS
CMTS

27. Brasil Telecom’s steps towards convergence5
Brasil Telecom’s steps towards convergence
Starting a process aiming to change the company’s skill:
moving from connectivity provider onto solution’s provider
integrating the Information and Network Technology people
Developing technical and market capabilities through a program focused initially on network and market teams.
Intensifying the company´s participation in international forums such as ETSI and Fixed-Mobile Convergence Alliance (FMCA), which Brasil Telecom is a member since 2003.
Consolidating the operation of the three Brasil Telecom’s ISP, with more than 3,5 million customers.
Merging the fixed and mobile operations.
Developed and implement convergent networks (NGN), services and systems associated.

28. 6
Final Comments
The network evolution shouldn’t occur because of the need of keeping up-to-date with technology.
The evolution drive is the need of offering news services or the improvement of operational efficiency.
The speed of the implementation will be defined mainly by the market.
Don’t implement a new technology just to offer the same “old” services.
Regulatory and legal issues may accelerate or restrain evolution.

29. Thank You! Dante Nardelli Junior danten@brasiltelecom.com.br