Slide 1: Assets
Assets Current assets Cash and cash equivalents Trade accounts receivable, Deferred and recove! Inventories Other Noneurrent assets Deferred and recoverable taxes Eserow deposits Other Investments Property, plant and equipment, net Intangible assets, net Parent Company Consolidated Note 03/51/08 123
Slide 2: Statements of Income
STATEMENTS OF INCOME Three-month periods ended March 31, 2008 and December 31, 2007 (In thousands of reais – R$, except earnings per share) (A free translation of the original report issued in Portuguese
Slide 3: Notes to Quarterly Information
NOTES TO QUARTERLY INFORMATION 1. Operations and Background a) Controling shareholders Telecomunicações de São Paulo S.A. - Telesp (formerly Telesp Participações S.A. -TelespPar - “TelespPar”), is headquarted at Rua Martiniano de Carvalho, 851, in the capital of the State of São Paulo. Telesp belong
Slide 4: 6. Deferred and Recoverable Taxes
6. Deferred and Recoverable Taxes
Slide 5: 6. Deferred and Recoverable Taxes (Continued)
6. Deferred and Recoverable Taxes (Continued) Deferred income and social contribution taxes Considering the existence of taxable income in the last five fiscal years and the expected generation of future taxable profit discounted to present value based on a technical and feasibility business plan, a
Slide 6: Merged tax credit
The recoverable amounts above are based on projections subject to changes in the future. Merged tax credit Generated from the acquisition of investment from Figueira Administração e Participações S.A. in 2001, which held telecommunications network operating assets of Banco Itaú S.A. as well as the i
Slide 7: 7. Inventories
As presents above, goodwill amortization, net of provision reversal and of the corresponding tax credit, do not affect the net income of the period. For presentation purposes, the net amount of R$93,527 (R$65,469 under non-current assets and R$28,058 under current assets), basically represented by m
Slide 8: 7. Inventories (Continued)
7. Inventories (Continued) The allowance for reduction to recoverable value and obsolescence takes into account timely analyses carried out by the Company. 8. Other Assets
Slide 9: 8. Other Assets
Parent Company Consolidated Mari2008__Dec!2007_ _Mari2008__ Deei3007 Advanees to employees 413 6187 6.406 Advances to suppliers 18,025 20,688, 20,580 Prepaid expenses 107,268, 80,596 108.717 81,710 Receivables from Barramar S.A. (a) : 58,751 ie Intercompany receivables (Note 30) 219,006 220,235 97,2
Slide 10: Civil litigation
Civil litigation ‘ La Judicial Blocked Total non-cursent Parent Company Consolidated Mari2008___Deci2007 Deci3007 244,627 75.985 50,696 66.667 50,696 302205 SSS8 S645 suid
Slide 11: Breakdown of goodwill on investment acquisition
Breakdown of goodwill (negative goodwill) on investment acquisition, net of amortization, is as follows:
Slide 12: 11. Property, Plant and Equipment, Net
11. Property, Plant and Equipment, Net
Slide 13: 11. Property, Plant and Equipment, Net (Continued)
( In thousands of reais, unless otherwise stated) 11. Property, Plant and Equipment, Net (Continued)
Slide 14: pet lt and eine auysrgsh__@uunesay guns _unsseas! —_ansinss) soma
pet lt and eine auysrgsh__@uunesay guns _unsseas! —_ansinss) soma Sehgal cts tint Peo rTsnele TST eT) BaD THOT (NSaESI2) THI ‘Egupent and aries 130 12893,084 wosnyzm) 27642 12.504.306 (oe3.900) 2san408 Tremescn epee mes ano L708 rum ans Lao EL) wos ome e 25496 sym 131s ass uso) vers Suber pbc nd bot
Slide 15: 12. Intangible Assets Net (Continued)
12. Intangible Assets Net (Continued)
Slide 16: 13. Deferred Charges
13. Deferred Charges Deferred charges as of March 31, 2008 and December, 31, 2007 are as follows:
Slide 17: e-operatin
e-operatin Cost Accumulated amortization Goodwill on acquisition of newvork Cost Accumulated amortization Spanish and Figueira (merged from TDBH) Cost Accumulated amortization other Cost Accumulated amortization the 1p goodwill Parent Company. Mari2008_ __Deci2007_ _Mari2008__ Deci3007 - 3641 39,251
Slide 18: 14. Loans and Financing
The loan obtained from the National Bank for Social and Economic Development (BNDES) includes covenants relating to financial ratios, which have been fully met as of date. 14. Loans and Financing (*) Loans in foreign currency are as follows:
Slide 19: Loans and Financing balances
Balance as of Consolidated Currency Interest rate Principal _Inerest___Mari2008. Resolugo 2770 USD 50% 2961 o “3023 Resolugdo 2770 BY 0.50% 10 5.78% 3548 272,089 Resolugio 2770 EUR 5.74% 667 Untied Lown -JBIC Ry Libor + 1.259% so 5501 EC) Balance as of Consolidated Interest rate Interest Dec/2007 Re
Slide 20: 17. Payroll and Related Charges
17. Payroll and Related Charges
Slide 21: 18. Dividends and Interest on Shareholders' Equity
18. Dividends and Interest on Shareholders’ Equity
Slide 22: 19. Reserves, Net
19. Reserves, Net The Company, as an entity and also as the successor to the merged companies, and its subsidiaries are involved in labor, tax and civil lawsuits filed with different courts. The Company’s management regularly assesses the risk level of each legal claim in order to adopt the adequate
Slide 23: 19.1. Labor contingencies and reserves
19.1. Labor contingencies and reserves The Company has several reserves related to labor claims, amounting to R$472,001, consolidated, to cover cases considered as probable of losses. The amounts involved and respective risk levels are as follows:
Slide 24: 21. Shareholders' Equity
March 31, 2008 (In thousands of reais, unless otherwise stated) 21. Shareholders’ Equity Capital As of March 31, 2008 and December 31, 2007, paid-up capital is R$6,575,198. Subscribed and paid-up capital is represented by shares with no par value, held as follows:
Slide 25: Dividends – Net income on December 31, 2007
Dividends – Net income on December 31, 2007 On March 26, 2008, the General Shareholders’ Meeting approved dividends based on the accumulated earnings and dividends and interest on shareholders’ equity prescribed in 2007, as included in the balance sheet as of December 31, 2007, in the amount of R$35
Slide 26: 22. Net Operating Revenue (Continued)
22. Net Operating Revenue (Continued) Tariff adjustments affecting recorded revenue On July 17, 2007, the National Telecommunications Agency (ANATEL) approved the annual tariff adjustment for the Fixed Switched Telephone Service (STFC): Basic Local Plan: 2.21% Basic National Long-Distance Plan: 2.21
Slide 27: Cost of services provided
Depreciation amortization Personnel Materials Network interconnection Outside services. Other Consolidated Tiiar/2008 Mari2007 (562,003) (569,370) (50,426) (41313) (7.438) (8,089) (8.407) (952,719) (889,328) (961.263) (902,530) (297,841) (269,318) 41335) (305,677) (101,478) (00.212) (187,532) (17,07
Slide 28: 25. General and Administrative Expenses
25. General and Administrative Expenses
Slide 29: 26. Financial Income (Expenses)
26. Financial Income (Expenses)
Slide 30: 27. Other Operating Income, Net
27. Other Operating Income, Net
Slide 31: 28. Non-operating Income, Net
28. Non-operating Income, Net
Slide 32: 29. Income and Social Contribution Taxes
29. Income and Social Contribution Taxes Reconciliation of tax expenses and standard rates Reconciliation of the reported tax charges and the amounts calculated by applying 34% (income tax of 25% and social contribution tax of 9%) in March 31, 2008 and December 31, 2007 are shown in the table below:
Slide 33: 30. Transactions with Related Parties
Deferred tax assets and liabilities are shown in Notes 6 and 16, respectively. 30. Transactions with Related Parties The principal balances with related parties are as follows:
Slide 34: 30. Transactions with Related Parties (Continued)
Trade accounts receivable include receivables for telecommunications services, mainly represented by Vivo S.A. and Atento Brasil S.A. related with long-distance services. 30. Transactions with Related Parties (Continued) Other intercompany receivables in current and non-current assets comprise credi
Slide 35: Fair value of financial instruments
The discounted cash flow method was used to determine the market value of loans, financings, debentures and derivatives (exchange and interest rate swap) considering expected settlement of liabilities or realization of assets at the market rates prevailing at balance sheet date. The Company has a to
Slide 36: 33. Financial Instruments (Continued)
33. Financial Instruments (Continued) The principal market risk factors that affect the Company’s business are detailed below: a) Exchange rate risk As of March 31 2008, 17.92% (28.90% on December 31, 2007) of the debt was denominated in foreign currency (U.S. dollar and yen); 99.30% (100.09% on Dec
Slide 37: b) Interest rate risk
b) Interest rate risk To prevent against the exchange risk and variable interest rates on these foreign currency debts (Libor), the Company has hedge transactions in order to peg these debts to local currency, at floating rates indexed to the CDI (Inter-bank Deposit Certificate), in a way that the C
Slide 38: Management comments: revenues and costs
1. Accumulated net operating revenues to March 2008 amount to R$3,843.7 million, an increase of R$137.1 million, or 3.7%, over the R$3,706.6 million reported in the same prior year period. This increase was mainly due to the expansion of Speedy services, to the increase in revenues from national lon
Slide 39: Management comments: operating income and physical data
4. Operating income decreased 6.3% as compared to the same prior year period. This is partly due to the increase in operating expenses, especially those relating to fixed-mobile interconnection services carried out with other carriers, rental of infrastructure, last mile and backbone from other carr
Slide 40: Management Comments on Consolidated Performance (Continued)
MANAGEMENT COMMENTS ON CONSOLIDATED PERFORMANCE (Continued) (In millions of reais, unless otherwise stated) (A free translation of the original issued in Portuguese) 6. Investments The Company confirms its long-term commitment to the Telefonica Group in Brazil aimed not only at maintaining and expan
Slide 41: 11. Tariff adjustment on July 17, 2007
11. Tariff adjustment on July 17, 2007 Increase in the fixed-to-fixed tariff rates through Rulings No. 66,028 and 66,031 – The National Telecommunications Agency (ANATEL) approved the tariff increase percentages for the STFC, as per criteria established in the Local and National Long-Distance Conces