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TELE NORTE LESTE PARTICIPAÇÕES S.A.

TELE NORTE LESTE PARTICIPAÇÕES S.A. Overview – December / 2002. One of the largest Integrated Telecom Companies in Brazil 15.1 million fixed lines in service (Sep/02) 1.4 million mobile subscribers (Dec/02) Concession Area:  65% of Brazilian Territory / 93 million people

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TELE NORTE LESTE PARTICIPAÇÕES S.A.

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  1. TELE NORTE LESTE PARTICIPAÇÕES S.A.

  2. Overview – December / 2002 • One of the largest Integrated Telecom Companies in Brazil 15.1 million fixed lines in service (Sep/02) 1.4 million mobile subscribers (Dec/02) • Concession Area:  65% of Brazilian Territory / 93 million people  40% of Country’s GDP  Over 21 Million Households • Leadership in Local Services (98% market share) • Domestic and International Long Distance Services • Regional Mobile Services (GSM) • Data, Corporate & Value Added Services • TNLP4: Most Liquid Stock in Brazilian Market (BOVESPA) • Free Float: 79% of Total Shares • Level 2 ADR (NYSE:TNE): 28% of Total Shares • Market Value: US$ 2.8 billion (Dec/02)

  3. Telemar – Shareholders´ Structure TELEMAR PARTICIPAÇÕES S.A. * FREE FLOAT 18.7% 79.0% TELE NORTE LESTE PARTICIPAÇÕES S.A (TNE) Treasury Stock 2.3% CONTAX TELEMAR Norte Leste (TMAR) Treasury Stock Free Float 1.6% Pegasus 18.9% * Controlling Shareholder (53% of voting shares)

  4. TNE - Capital Structure TOTAL CAPITAL* Capital R$ 4,477 Million Total Shares: 383,846 million Preferred: 255,897 million Common: 127,949 million BNDESPar Fiago AG Telecom ASSECA Participações Lexpart Part. L. F. Tel BrasilCap BrasilVeículos 25.0% 19.9% 11.3% 11.3% 11.3% 11.3% 5.0% 5.0% 79.0% 18.7% Free Float TELEMAR PARTICIPAÇÕES S.A. Treasury Stock = 2.3% Tele Norte Leste Participações S.A. (TNE) * 53% of TNE common shares

  5. Corporate Structure • General Shareholders´ Meeting • Board of Directors • 11 board members 10 shareholders representatives plus the CEO • Board Committees • Fiscal Committee • 5 members, appointed by: • Controlling Shareholder ( Telemar Participações) –3; • Minority Shareholders (voting shares) – 1; • Minority Shareholders (preferred shares) –1; • Objectives: Review and approve the Company´s accounting issues and procedures. • Executive Committee • 3 members: TNE, TMAR and Oi´s CEO’s • Independent Accountants • PricewaterhouseCoopers

  6. Oi CEO TMAR CEO TNE CEO Managing Structure Board of Directors Fiscal Committee TNE Executive Committee CFO Strategy and Regulation Asset Management Financial Planning Public Relations Billing Management Procurement Legal Counsel Internal Audit Controlling Treasury/ Investor Relations

  7. Main Achievements 2002 1998 International RI RII RIII Processes Management/Processes 16 Companies 16 IT Systems 15 Network Platforms 23 Network Management Centers 116 Call Centers All Unified Services Restructuring 16  1 Local & Advanced Voice Domestic & International LD Nationwide Data Transmission Wireless Call Center Network Management / Internet - Optimization of Resources; - Process Standardization; - Management Centralization; - Merge of wireline companies; Services Local Voice and regional LD; Regional Data Communic. Market Approach Market Vision Geographic Customer Segmentation

  8. Anatel Targets: Reaping the Benefits • Oi’s Operational Launching • Domestic Long Distance Service • International Long Distance Service • Nationwide Data Services (Pegasus´Acquisition)

  9. Wireline Platform Growth and Utilization Rate - TMAR Universal Service Targets CAGR (LIS) = 23.8% 106% Wireless 15.1 Wireline 86% 92% 82% 93% 89% 89% Utilization Rate (%) *Acquisition of the Company

  10. Revenue Growth - TNE (R$ Mn) 96% 13,660 CAGR = 25.1% 11,739 +17% yoy 10,851 10,103 8,648 8,433 8,122 6,946 6,222 5,158 1998 1999 2000 2001 9M02 Gross Revenue Net Revenue

  11. Operating Expenses - TNE* (R$ Mn) 6,663 Cost of Services 4,811 4,618 4,095 Interconnection 3,470 3,488 Selling Expenses G&A and Other Operating Expenses 1998 1999 2000 9M02 2001 9M01 * Ex depreciation and amortization

  12. Bad Debt Provisions – TNE (% of Gross Revenue)

  13. EBITDA Growth - TNE (R$ Mn) 10,103 50% 44% 47% 8,648 8,127 33% 6,222 34% 5,158 4,032 4,030 3,440 2,735 1,689 1998 1999 2000 2001 9M02 EBITDA EBITDA Margin (%) Net Revenue

  14. Recent Financial Results (R$ Mn)

  15. Consolidated Capex - TNE (R$ Mn) CAPEX / Net Revenue 10,060 2,172 7,888 1,334 2,804 2,500 2,244 702 632 1998 1999 2000 2001 9M02 Wireline Wireless

  16. Net Debt – Quarterly Evolution - TNE (R$ Mn)

  17. Debt Profile – Currency & Cost (Sep/02) Currency Interest Index 10% Local CDI 13% 33% 11% US$ TJLP 20% 52% Yen (Swap to US$) Fixed Rate (Foreign Currency) CY Basquet 15% 46% Floating Rate (Foreign Currency) Cost of Debt Currency Cost (% p.a.) US$ Libor + 5 Yen 1.7 Basket 12.3 Real 16.0

  18. Debt Profile – Repayment Schedule (Sep/02) 29% Total Debt: R$ 10,389 Mn 21% 18% 18% 11% 4% 2002 2003 2004 2005 2006 2007 onwards

  19. 4.3% 4.3%* 3.6% 500 3.0% 3.1% 300 248 224 224 1998 1999 2000 2001 2002E Dividends (R$ Mn) Dividend Yield (%) Dividends and Dividend Yield – TNE (1998/2002) *9M2002 Annualized

  20. Coverage Distribution Resource Optimization Oi´s Project: Pre-Launching Rollout • 200 cities covered; 30 million people • GPRS coverage in 6 main capitals • Record of site installation per month • CAPEX optimization (co-sitting) • International Roaming • Main Suppliers: Nokia, Siemens, Alcatel, Ericsson Coverage focused on profitable areas • 1,600 points of sales (breaking exclusivity of A & B band agreements) • Diversified channels with high capillarity: • Retail, specialized agents/dealers, stores, telesales • Corporate sales effort combined with Telemar. Consumer and corporate focus through high capillarity and diversity of channels • Tight headcount structure: ~660 employees • Infrastructure Sharing • Outsourcing (including “call centers”) • Synergies with Telemar • Strong brand Focus on profitable growth, minimizing OPEX and CAPEX

  21. Post-Launching Results Initial Targets (July/2002) First Achievements • 500,000 clients in 12 months • 1,400,000 clients in just six months • Innovative Campaign: 31 Years • Differentiated Service Plans • Diversified Handsets Offer. • ARPU of R$ 26 • ARPU over R$ 30 (first 6 months) • MIX Pre / Post: 90% / 10% • MIX Pre / Post: 80% / 20% (6 months) • Market share and gross adds bellow fair market share • Market share and gross adds wellabove fair market share

  22. Oi´s Subscriber Base – Monthly Evolution(in thousands) 1,400 20% 978 22% 677 502 22% 386 20% 80% 78% 19% 78% 178 80% 21% 81% 79% Jul_02 Aug_02 Sep_02 Oct_02 Nov_02 Dec_02 Pre paid Post-paid

  23. OUTLOOK 2002 (Review) • Lines in Service: +300/400 K • New Revenues: DLD/ILD and Mobile Services (Oi) • Capex: Around R$ 2 Bn • Bad Debt: Up to 5% of Gross Revenue • Net Debt: Around R$ 9 Bn (2002 YE) • Oi: 1 Mn subscribers (2002 YE)

  24. Revenue Growth Strategy- TNE Profitability Data & Corporate Local Long Distance Mobility Competition

  25. Revenue Growth Strategy- TNE Maintain Leadership in Home Market Advanced Voice Services (Corporate / Middle Market) Best Carrier´s Carrier – Network leverage (Home Market) Increase ARPU Value Added Services Increase ADSL sales Reduce Interconnection Costs (TNE level) Local Service

  26. Revenue Growth Strategy- TNE Leadership in Home Market Conquer new markets (Inter-regional / International / SMP – Dial Code) Protect existing market: • Retail: Loyalty / Retention Programs + Promotions • Corporate: Best Quality (Call Completion / Billing) + Aggressive Service Plans Long Distance Service

  27. Revenue Growth Strategy- TNE Increase offer to SME (Home Market) ADSL (High end / SOHO / Small Businesses) Nationwide Services (Corporate Level) Leverage on National Backbone (Telemar + Pegasus) Competitive Service Level Agreements Data & Corporate Services

  28. Revenue Growth Strategy- TNE Deepen Market Segmentation Stimulate DATA + SMS Focus on Corporate Leverage on Competitive Advantages: • Synergies with wireline • Regional coverage • GSM technology (speed & features) Low Handset Subsidies / Aggressive Service Plans Increase National & International Roaming Mobile Services

  29. “SAFE HARBOR” STATEMENT This presentation contains forward-looking statements. Statements that are not historical facts, including statements about our beliefs and expectations, are forward-looking statements and involve inherent risks and uncertainties. These statements are based on current plans, estimates and projections, and therefore you should not place undue reliance on them. Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update publicly any of them in light of new information or future events. Investor Relations Rua Humberto de Campos, 425 / 8º andar Leblon Rio de Janeiro -RJ Phone: ( 55 21) 3131-1314/1313/1315/1316/1317 Fax: (55 21) 3131-1155 E-mail: invest@telemar.com.br Visit our website: http://www.telemar.com.br/ri

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