Acquisition of November 1 st 2002

2 Table of Contents I.Overview of Pegasus II.Transaction Rationale III.Pegasus Valuation IV.Transaction Structure

I. Overview of Pegasus

4 Overview of Pegasus Background Historical 4 Current Ownership Structure Pegasus is founded by Andrade Gutierrez The Company is granted by Anatel an SLE 1 license to provide corporate network services on a national and international basis Pegasus launches commercial operations as a “carriers' carrier”   Alcatel provides vendor financing Acquisition of VIS 2 and of 360km of fiber optic deployed by Talb 3 in São Paulo   Focus on the corporate client segment   Strategic investment by GP Investimentos, Opportunity, Banco do Brasil and Telemar Pegasus completes its long-distance backbone and activates its main metropolitan rings   Strategic investment by ABN Amro and increase in Banco do Brasil and Telemar’s ownership interest in Pegasus Pegasus continues to expand both its carrier’s carrier and corporate businesses   EBITDA positive in early % GP Investimentos ABN AMRO AG Telecom OpportunityOpportunity Banco do Brasil La Fonte TNLTNL 10.9% 6.7% 7.1% 11.7% 32.1% Source: Pegasus Telecom 1 Serviço limitado especializado 2 VIS - Versolato Informática e Soluções Ltda., a provider of broadband data transmission services via radio technology 3 Talb Participações S.A., one of Grupo GP Investimentos' portfolio companies 4 Does not include potential dilution from options granted to Pegasus management totaling 4.27%

5 Key Company Highlights Second largest fiber network in Brazil’s main business market - São Paulo (capital) Metropolitan fiber rings in Regions II and III (difficult to replicate) Long distance backbone connecting Brazil’s most important business markets Strategic investment in AIX, the largest network of ducts for fiber optic in the State of São Paulo Growing customer base of premium corporate clients Lean organization and experienced management team

6 Network Coverage and Capacity Pegasus network consists of fiber optic cable distributed through a 5,723 km long distance backbone and 872 km of urban rings covering 10 cities with 770 POPs Long Distance NetworkUrban Rings Source: Pegasus Telecom

7 Key Clients by Segment As of June 2002, Pegasus had a total of 32 carrier clients and 246 corporate and SME clients Source: Pegasus Telecom CarrierCorporate SME

8 Pegasus Financial Highlights Monthly Financial Performance Summary Financials

9 Overview of Brazilian Data Market Market Share by Total Data Revenues – 2001 Brazilian Data Market Revenues CAGR IDC = 23% Pyramid = 21% Source: IDC – Brazil Data Network Services, 2002 and Pyramid Research Note: 1. Excludes leased lines (wholesale) revenues and revenues associated with VAS (data centers, ASPs) Source: IDC – Brazil Data Network Services, 2002

II. Transaction Rationale

11 Transaction Rationale Unique Strategic Fit with Telemar Network is perfectly complementary to Telemar’s Full technological compatibility Integration of Pegasus with Telemar to be immediate Strategic Fit TMAR Pegasus TMAR + Pegasus (joint use) TMAR Concession Area Backbone: TMAR and Pegasus Pegasus’ network covers the very markets Telemar is seeking to enter

12 Transaction Rationale Consolidating Telemar’s Data Business   Consolidate Telemar data strategy   Important time-to-market effect for nationwide presence   Strategic and defensive move

13 Transaction Rationale Alternatives to Pegasus   Purchase other Asset   Build up of a new network   Continue to rent capacity

14 Transaction Rationale Expected Revenue Synergies from Combination with Telemar   Accelerate market share increase in Regions II and III   Increase penetration in Telemar´s key accounts   Enhance Telemar Revenue stream by upgrading network quality levels   Increase in revenues from other carriers

15 Transaction Rationale Expected Cost, Capex and Fiscal Synergies from Combination with Telemar   Decrease in maintenance cost   Reduction in SG&A expenses   CAPEX   Fiscal

III. Pegasus Valuation

17 Pegasus Valuation Overview of the Process   Valuation process 1. 1.Committee headed by BNDES 2. 2.Teams composed by TMAR’s Senior Management st Class Market Professionals

18 Pegasus Valuation Main Assumptions   Revenue Build-up   Costs / SG&A Build-up   CAPEX   WACC   Terminal Value

19 Final Valuation and Recommended Price Pegasus Equity Value: R$ 221,803,704 Debt: R$ 339,146,296 as of June 30, 2002 Acquisition price will be significantly below the valuation of Pegasus’ latest round of financing Implied Equity Value in R$ MM 1 Implied Equity Value in US$ MM % - 78% Note: Telemar currently has 24.4% of Pegasus. Total Telemar investment in Pegasus amount to R$100.5mm (US$51.5mm) 1. 1.Assuming net debt of R$ 339,146,296 for Pegasus as of June 30, Assuming exchange rate of R$1.97/US$ as of December 21, 2000 for last round of financing and exchange rate of R$3.82/US$ for current equity valuation (PTAX of Oct 29, 2002)

IV. Transaction Structure

21 Acquisition Proposal Structure Transaction Value Consideration Acquisition of % of Pegasus capital through Telemar Norte Leste (TMAR) Equity ValueR$ 221,803,704 SynergiesR$ 114,000,000 Tax CreditR$ 44,000,000 (upon materialization) Cash + debt assumption Terms R$ 50 million upon signing the contract and the balance in 90 days Other Contingencies and adjustments to be deducted from price Final Values to be calculated based on the transfer Balance Sheet Debt and Working Capital variation to be adjusted as per transfer Balance Sheet

22 Acquisition Proposal Approval Process Timing Transaction will be submitted to shareholders vote by Nov. 29 th, 2002 The Board of Directors of Telemar Norte Leste approved the terms of the transaction in Oct.30 th, 2002, and recommended that the acquisition is submitted to a vote at an extraordinary shareholders meeting Pending ANATEL and CADE approvals