1. Luiz Pinto, Matthias Sigrist, Daniel Packard

2.  Decrease SIM portfolio by 43 basis points to come in line with S&P 500  Reallocate funds within the Telecommunication SIM Sector

3. Sector S&P 500SIM PortfolioDifference Consumer Discretionary9.11%7.51%-1.60% Consumer Staples11.94%12.23%0.29% Energy12.35%12.80%0.45% Financials14.66%6.59%-8.07% Health Care12.65%13.13%0.48% Industrial10.09%11.97%1.88% Information Technology19.04%21.97%2.92% Materials3.39%4.52%1.13% Telecommunications3.09%3.51%0.43% Utilities3.68%3.19%-0.49%

4.  Sell AT&T (219 basis points)  Buy Verizon (117 basis points)  Increase stake in NII Holdings (59 basis points to 200 points)  Total Sector Holdings – 317 basis points (43 basis point decrease)

5.  Largest US-based telecom company. ◦ 2008 Revenues: $124 Billion Two major business lines:  Wireless: Cell Phones, data and voice services. ◦ Acquisitions of BellSouth and Cingular ◦ Limited to the Domestic Market  Wireline: Landline communication, Internet, TV, ◦ Cable and satellite internet provider ◦ IT products and IT communications to businesses ◦ TV Competitors: Time Warner, Verizon, Comcast, Directv

6. Wireless  Currently experiencing high growth. ◦ Revenues: Increased 12% from 2007 to 2008 ◦ Customers: Increased 9%  49% of total sales/ 78% Total Profit Wireline  Revenues are slightly decreasing. ◦ 1.7% from 2007 to 2008 ◦ Customers shifted from Wireline to Wireless ◦ FiOS product sales increasing

7. Wireless  I-phone main revenue growth driver ◦ Exclusive contract with Apple expected to run out in 2010 ◦ Verizon’s Droid brings heavy competition ◦ Bad network reputation  3G Network ◦ Under heavy criticism ◦ Sold Made fun of by Verizon Wireline  Landline ◦ According to AT&T: customers simply switch to wireless  TV and Internet ◦ Increased competition ◦ Not main focus of management

8.  Current Stock Price: $27.10  Dividend Yield: 6.10%  Market Cap: $ 160 Billion  Beta: 0.65  Price in line w/Industry  Undervalued vs. S&P 500

9.  Stock Price (Nov. 25): $27.10  Target Price Calculation: ◦ Discount Rate: 10% ◦ Terminal FCF Growth: 3% ◦ Revenue Growth: Around 2.8 - 3%  Discounted Cash Flow: $32.77  Price forward/E: $25.43  Dividend Discount:$23.32  Final Target Price: $30(60% DCF, 40% P/E) ◦ Assuming a conservative outlook. ◦ Potential upside: 10.7%

12.  Second largest US-based telecom company. ◦ 2008 Revenues: $98 Billion Two major business lines:  Wireless: Cell Phones, data and voice services. ◦ Joint Venture with British operator, Vodafone ◦ Limited to the Domestic Market  Wireline/Business: Recently merged. ◦ Cable Internet provider ◦ IT products and IT communications to businesses ◦ Recently expanded to the International Market

13. Wireless  Currently experiencing high growth. ◦ Revenues: Increased 12% from 2007 to 2008 ◦ Customers: Increased 9%  49% of total sales/ 78% Total Profit Wireline  Revenues are slightly decreasing. ◦ 1.7% from 2007 to 2008 ◦ Customers shifted from Wireline to Wireless ◦ FiOS product sales increasing

14. Wireless  4G Technology  Motorola Droid ◦ Recently launched. Competitor to AT&T’s iPhone ◦ Sold 100,000 units in the first weekend ◦ Expected to have a positive impact on earnings Wireline  Fios Technology ◦ Fiber optic communications network, with TV, cable, and phone ◦ Launched in 2007, is now being expanded all across the country  International Operations ◦ Recently started with the acquisition of MCI ◦ High capacity for growth ◦ Focused on Business Customers

15.  Current Stock Price: $31.78  Dividend Yield: 6.20%  Market Cap: $ 90.20 Billion Relative to Industry HighLowMedianCurrent P/Trailing E 1.2.71.901.1 P/Forward E 1.2.71.91.99 P/B 2.4.71.31.1 P/S 1.2.6.9.8 P/CF 1.1.7.9  Beta: 0.65  Price in line w/Industry  Undervalued vs. S&P 500

16.  Stock Price on 10/1: $28.80  Current Stock Price: $31.78  Target Price Calculation: ◦ Discount Rate: 10% ◦ Terminal FCF Growth: 4% ◦ Revenue Growth: Around 3.5%  Discounted Cash Flow: $35.78  Multiples: From $36 to $42  Final Target Price: $36 ◦ Assuming a conservative outlook. ◦ Potential upside: 13%

20.  Latin American Wireless Company ◦ 2008 Revenues: $4.2 Billion Offers four types of services:  Nextel Direct Connect  Wireless Data Solutions and Mobile Internet Access  Handsets  International Roaming Services

24. Wireless  Spectrum Acquisition  3G Network  Economic Upturn  Reduced cost per customer

25.  Current Stock Price: $30.95  Dividend Yield: N/A  Market Cap: $ 4.8 Billion  Beta: 2.23  Industry Undervalue  Undervalued vs. S&P 500

26.  Stock Price (Nov. 23): $30.95  Target Price Calculation: ◦ Discount Rate: 10.5% ◦ Terminal FCF Growth: 5% ◦ Revenue Growth: Around 4.5 to 5%  Discounted Cash Flow: $41.67  Price forward/E: $41.67  Final Target Price: $41.67(100% DCF) ◦ Assuming a conservative outlook. ◦ Potential upside: 34.6%

29. Below is a brief summary of NII Holdings BUY rating: ◦ NII’s discounted cash flows and valuation analysis - 34% undervalued. ◦ NII’s return on assets and sustained capital expenditures despite economic slowdown. ◦ Acquire additional telecom spectrum in selective emerging markets. ◦ NII has successfully differentiated themselves. ◦ NII’s cyclical nature indicates growth as domestic and international economic conditions improve. Risks related to this recommendation include: ◦ Reduced demand for services resulting from economic downturn causing reduced discretionary spending. ◦ Increased levels of competition among the other wireless providers. ◦ Increased levels of voluntary and involuntary customer turnover. ◦ Available spectrum limitations and government regulation.

30. Below is a summary of Verizon Communications BUY rating: ◦ According to the DCF and the multiples valuation, there is a conservative upside of 13%. Might be higher. ◦ High growth in the wireless sector, with the highest level of network coverage in the country. ◦ Now has a comparable product to the iPhone, the Droid, expected to boost sales. ◦ Has a chance of leading in new 4G technology, increasing its value. ◦ Has recently expanded to international markets, reducing its exposure to the American market. Risks related to this recommendation include: ◦ Shrinking Wireline segment might affect the long-term profitability of the company. ◦ Droid sales can hurt stock price, if below expectations. ◦ Capital intensive nature. Demands a huge continuous investment.

31.  Sell AT&T (219 basis points)  Buy Verizon (117 basis points)  Increase stake in NII Holdings (59 basis points to 200 points)  Total Sector Holdings – 317 basis points (42 basis point decrease)