Slide 1: Special review report of independent auditors on quarterly information
Special review report of independent auditors on quarterly information (A free translation of the original report issued in Portuguese) Shareholders, Management and Board Members Telecomunicações de São Paulo S.A. – TELESP São Paulo - SP 1. We have reviewed the consolidated Quarterly Information (IT
Slide 2: The accompanying notes are an integral part of this consolidated quarterly information.
The accompanying notes are an integral part of this consolidated quarterly information.
Slide 3: The accompanying notes are an integral part of this consolidated quarterly information.
The accompanying notes are an integral part of this consolidated quarterly information.
Slide 4: The accompanying notes are an integral part of this consolidated quarterly information.
The accompanying notes are an integral part of this consolidated quarterly information.
Slide 5: Consolidated statements of cash flows
Telecomunicações de São Paulo S,A, - TELESP Consolidated statements of cash flows Six months periods ended June 30, 2010 and June 30, 2009 (In thousands of reais – R$) (A free translation of the original report issued in Portuguese)
Slide 6: Cash flows from operations
96/30/2010 96/30/2009 cash flows from operations Net income for the period sta03tt 113.621 Expenses (revenues) not afecting cash 4048,547 4,553,570 Depreciation and amortization 205,035 1,286,883 Monetary and exchange variations ote (48,378) Equity in earnings of subsidiaries (2203) 198) (Gain) Loss
Slide 7: Operations and background
The accompanying notes are an integral part of this consolidated quarterly information. Telecomunicações de São Paulo S.A. - TELESP Notes to the consolidated quarterly information Six months period ended June 30, 2010 (In thousands of reais – R$) (A free translation of the original report issued in
Slide 8: First-time adoption of IFRS (Continued)
4. First-time adoption of IFRS (Continued) Telecomunicações de São Paulo S.A. - TELESP Notes to the consolidated quarterly information (Continued) Six months period ended June 30, 2010 (In thousands of reais – R$) (A free translation of the original report issued in Portuguese) 4.1 Exemptions and ex
Slide 9: First-time adoption of IFRS: major differences
Telecomunicações de São Paulo S.A. - TELESP Notes to the consolidated quarterly information (Continued) Six months period ended June 30, 2010 (In thousands of reais – R$) (A free translation of the original report issued in Portuguese) 4. First-time adoption of IFRS (Continued) 4.2 Major differences
Slide 10: Deferred and recoverable taxes
7. Deferred and recoverable taxes 7.1 Recoverable taxes
Slide 11: Deferred taxes
(*) Refers to credits on the acquisition of property, plant and equipment items, available for offset against VAT obligations in 48 months. (**) Regulation specific for telecommunication companies that establishes certain information requirements to recognize ICMS tax credit over sales return/cancel
Slide 12: Allowance for reduction to recoverable value and obsolescence
The allowance for reduction to recoverable value and obsolescence takes into account timely analyses carried out by the Company.
Slide 13: Other assets notes
(a) Refers to receivables from Barramar S.A., registered in Companhia AIX de Participações, net of allowance for losses. (b) Comprises commercial agreements with global service providers.
Slide 14: Notes to quarterly information
Telecomunicações de São Paulo S.A. - TELESP Notes to the consolidated quarterly information (Continued) Six months period ended June 30, 2010 (In thousands of reais – R$) (A free translation of the original report issued in Portuguese)
Slide 15: Property, plant and equipment, net
Telecomunicações de São Paulo S.A. - TELESP Notes to the consolidated quarterly information (Continued) Six months period ended June 30, 2010 (In thousands of reais – R$) (A free translation of the original report issued in Portuguese) 12. Property, plant and equipment, net
Slide 16: Review of property, plant and equipment useful lives
Telecomunicações de São Paulo S.A. - TELESP Notes to the consolidated quarterly information (Continued) Six months period ended June 30, 2010 (In thousands of reais – R$) (A free translation of the original report issued in Portuguese) Review of property, plant and equipment useful lives During the
Slide 17: Goodwill notes
(a) Goodwill arising from the spin-off of Figueira, which was merged into the Company as a result of the merger of Telefônica Data Brasil Holding S.A. (TDBH) in 2006. (b) Goodwill arising from the acquisition of control over Santo Genovese Participações Ltda., (controlling shareholder of Atrium Tele
Slide 18: Loans and financing
(*) Amounts presented at fair value, when applicable. Telecomunicações de São Paulo S.A. - TELESP Notes to the consolidated quarterly information (Continued) Six months period ended June 30, 2010 (In thousands of reais – R$) (A free translation of the original report issued in Portuguese) 14. Loans
Slide 19: Taxes payable notes
(a) Income and social contribution taxes payable are presented net of payments on an estimate basis. (b) “Legal liabilities” account records amounts relating to lawsuits filed by the Company in order to relieving it from payment of the Contribution for Intervention in the Economic Order (CIDE) on re
Slide 20: Dividends and interest on shareholders' equity payable
Telecomunicações de São Paulo S.A. - TELESP Notes to the consolidated quarterly information (Continued) Six months period ended June 30, 2010 (In thousands of reais – R$) (A free translation of the original report issued in Portuguese) 17. Dividends and interest on shareholders’ equity payable
Slide 21: Reserves for contingencies
Most of the interest on shareholders’ equity and total dividends payable to minority shareholders refer to available amounts declared, but not claimed yet. 18. Reserves for contingencies The Company, as an entity and also as the successor to the merged companies, and its subsidiaries are involved in
Slide 22: Provisions for contingencies
Telecomunicações de São Paulo S.A. - TELESP Notes to the consolidated quarterly information (Continued) Six months period ended June 30, 2010 (In thousands of reais – R$) (A free translation of the original report issued in Portuguese) s emester there were no significant changes in labor, tax and ci
Slide 23: Contingency: class action by Public Prosecutor Office
Except for the contingency commented below, there were no significant changes in labor, tax and civil contingencies in comparison with the previous year: The Public Prosecutor Office of the State of São Paulo commenced a class action claiming moral and property damages suffered by all consumers of t
Slide 24: Shareholders' equity
(a) Amounts resulting from the auction of share fractions after the reverse spin-off process in 2005, and TDBH acquisition process in 2006. (b) Refer mainly to deferral of revenue from activation fee (Note 4.2.b) and inductive cards. (c) Finance Lease: The Company has finance lease contracts for use
Slide 25: Shareholders' equity notes
Telecomunicações de São Paulo S.A. - TELESP Notes to the consolidated quarterly information (Continued) Six months period ended June 30, 2010 (In thousands of reais – R$) (A free translation of the original report issued in Portuguese)
Slide 26: Depreciation and cost notes
(a) As mentioned in Note 12, the depreciation account was impacted by the review of property, plant and equipment useful lives.
Slide 27: Other operating income (expenses), net
23. Other operating income (expenses), net Jun/2010 Jun/2009 Technical and administrative services 18,308 19,062 Fines on telecommunication services 61,753 58,134 Recovered expenses 31,665 28,785 Materials (22703) (25,100) Rental of infrastructure (3.028) 8.459 Donations and sponsorships (16,898) (1
Slide 28: Income tax and social contribution reconciliation
The Company recognizes income tax and social contribution monthly on the accrual basis and pays the taxes on an estimated basis, in accordance with the trial balance for suspension or reduction. The taxes calculated on income until the month of the financial statements are recorded in liabilities or
Slide 29: Notes to quarterly information
Telecomunicações de São Paulo S.A. - TELESP Notes to the consolidated quarterly information (Continued) Six months period ended June 30, 2010 (In thousands of reais – R$) (A free translation of the original report issued in Portuguese)
Slide 30: Notes to quarterly information
Telecomunicações de São Paulo S.A. - TELESP Notes to the consolidated quarterly information (Continued) Six months period ended June 30, 2010 (In thousands of reais – R$) (A free translation of the original report issued in Portuguese)
Slide 31: Financial instruments
The Company and its subsidiaries made a valuation of their financial assets and liabilities in relation to market values based on available information and appropriate valuation methodologies. However, the interpretation of market information, as well as the selection of methodologies, requires cons
Slide 32: Derivative notional and fair values
Notional Valve Fair Value ‘Accumulated effec in 200 ‘Amount ‘Amout Receivable Payable Description Index _junt0_ dex junto __dezg ecsived) soy ‘Assets oregn Curency Foreant zest. 20361 _24592 2301 - - Bes uso 3185 31882842 2718 : : Votorantien uso te7ez2 25.108 ta 20200 2 3 orsign Curency sane ‘5007
Slide 33: Swaps and forward operations
a) Swaps of foreign currency x CDI (R$21,332) – swap operations with several maturities until 2014, with the objective of hedging foreign exchange variation for loans with these characteristics (debt fair value of R$21,329). b) US dollar x Euro forward (R$35,392) – forward operations maturing on Sep
Slide 34: Hedge accounting
For purpose of preparing the quarterly information, the Company adopted hedge accounting only for its foreign currency X CDI swap operations providing financial debt hedge. Under this methodology, both the derivative and the hedged instrument are stated at fair value. For the period ended June 30, 2
Slide 35: Financial instruments sensitivity
Telecomunicações de São Paulo S.A. - TELESP Notes to the consolidated quarterly information (Continued) Six months period ended June 30, 2010 (In thousands of reais – R$) (A free translation of the original report issued in Portuguese)
Slide 36: Sensitivity analysis and fair values
To determine the net exposure of the sensibility analysis, all derivatives were considered at market value and only debts (hedged elements) classified under hedge accounting method were also considered at fair value. The fair values shown in the table above are based on the status of the portfolio a
Slide 37: Performance report: revenue and operating expenses
1. Net operating revenue accumulated through June 2010 amounted to R$7,791,2 million, which, when compared to R$7,898,4 million recorded in the same prior-year period, represented a decrease of R$107,2 million, or 1,4%. The major reductions occurred in local fixed telephone revenues, explained by a