1. 7 th Annual Latin America Conference www.telemar.com.br/ir September 13-14, 2004

2. 7 th Annual Latin America Conference - September/2004 www.telemar.com.br/ir 1 Part II - Recent Developments and Growth Prospects 2.1 Highlights 2003/2004 2.2 Growth of the Business 2.3 Review of Operating Results 2.4 Financial Position Part I - Overview 1.1 Brazilian Telecom Market 1.2 Telemar

3. 7 th Annual Latin America Conference - September/2004 www.telemar.com.br/ir 2 Part I - Overview 1.1 Brazilian Telecom Market 1.2 Telemar

4. 7 th Annual Latin America Conference - September/2004 www.telemar.com.br/ir 3 1.1 Wireline Sector *Source:Company´s Information 2001 37.4 1998 20.0 2003 39.2LIS (Million)* 2002 38.8 Jun/04 39.3 Brasil Telecom 9.6 M 20% Telemar 32% Telefonica 12.2 M 31% Embratel (DLD & ILD) Lines in Service 17% 15.2 M Revenue Share (Brazil: R$ 29.1 bn - 1H04) * Includes smaller incumbents and mirror companies (CTBC, Sercomtel, Vesper and GVT). 211123Penetration (%) 23 Fixed Lines in Service have doubled since privatization Largest Incumbents

5. 7 th Annual Latin America Conference - September/2004 www.telemar.com.br/ir 4 1.1 Wireless Market *Source:Company´s Information Total Subscribers National Market Share * Other groups such as Nextel, CTBC and Sercomtel had 0.3 m subscribers (0.5% market share). Vivo – TEL/PT (CDMA) 23.5 m 44% Opportunity (TDMA/GSM)* TIM (TDMA/GSM) 10.4 m 19% Claro -AMX (TDMA/GSM) 11.1 m 21% Oi - Telemar (100% GSM) 5.1 m 9% 3.6 m 7% 2001 28.7 1998 7.4 2003 46.4LIS (Million)* 2002 34.9 Jun/04 54.0 17526Penetration (%) 2030 Largest Groups

6. 7 th Annual Latin America Conference - September/2004 www.telemar.com.br/ir 5 *Source:Company Information Fixed-line platform – LIS (million) Penetration Rate Brazil (%) Region I Brazil Mobile platform – Subscribers (million) Brazil Penetration Rate Brazil (%) Region I 1 Privatization (Jul/98) 98 1 9900 01 02 03Jul/04 98 1 9900 01 02 03Jul/04 1.1 Growth in Customer Base  After doubling in size after privatization in 1998, further expansion of fixed-line platform more closely linked performance of Brazilian economy (current household penetration ~55%).  Brazilian subscriber base still growing at a rapid pace (over 30% p.a.).

7. 7 th Annual Latin America Conference - September/2004 www.telemar.com.br/ir 6 In jul/02, the penetration rate in Region I was 15% and in Brazil 18%; Wireless penetration in Region I (25%) still offers room for growth; According to Pyramid´s forecast, penetration will reach 40% by 2006. Region II – 37.3% Region I – 25.0% Region III – 36.5% Brazil – 30.4% 1.1 Mobile Penetration Rate – Jul/04 * In July/04, population was estimated by IBGE.

8. 7 th Annual Latin America Conference - September/2004 www.telemar.com.br/ir 7 1.1 Mobile Penetration - Projections Ovum Pyramid Brazil (%) 2002 2003 200420052006 39% 40% 20% July/2004: 30.4%

9. 7 th Annual Latin America Conference - September/2004 www.telemar.com.br/ir 8 1.1 ADSL Market in Brazil Market Share – Brazil* PC Penetration (% of households)** * *Source: Pyramid Research ** Brazil has approximately 42 million households 2003 Brazil has 1.4 million broadband accesses (Jun/04); ADSL has 84% market share of the Brazilian broadband subscriber base; Broadband penetration is expected to represent 30% of total internet access in Brazil in the next five years. Brazil has 1.4 million broadband accesses (Jun/04); ADSL has 84% market share of the Brazilian broadband subscriber base; Broadband penetration is expected to represent 30% of total internet access in Brazil in the next five years. Dec/03 Jun/04 *Source: Teleco & Telemar estimates. (ADSL) (Cable) (ADSL)

10. 7 th Annual Latin America Conference - September/2004 www.telemar.com.br/ir 9 1.2 Telemar – Overview (June/2004) Integrated Telecom Service Provider –15.2 million wirelines in service –5.3 million wireless subscribers (Jul/04) –345,000 ADSL subscribers Concession Area (Region I ) - Local Service and PCS –65% of Brazilian territory/94 million people –40% of country’s GDP –Over 20 million households Leadership in local and long distance services (Region I ) PCS Mobile services (GSM) in Region I Data, Corporate & Call Center Services (nationwide) High Free Float: 82% of total shares Market value: US$ 5.1 billion (Jul/04) Region I = Concession for fixed line services License for Wireless services (GSM) Nationwide Authorization for fixed line services Telemar shares heavily traded at Bovespa (TNLP4): ~ US$ 47 m / day and at the NYSE (TNE): ~ US$ 22 m / day (Jul/04)

11. 7 th Annual Latin America Conference - September/2004 www.telemar.com.br/ir 10 1.2 Telemar - Shareholder Structure 81.0% (TMAR) Tele Norte Leste Participações (TNE) ADR TNLP Wireline Wireless Data Contact Center Holding Co.

12. 7 th Annual Latin America Conference - September/2004 www.telemar.com.br/ir 11 Part II - Recent Developments and Growth Prospects 2.1 Highlights 2003/2004 2.2 Growth of the Business 2.3 Review of Operating Results 2.4 Financial Position

13. 7 th Annual Latin America Conference - September/2004 www.telemar.com.br/ir 12 Building a fully integrated telecom service provider Change, adaptation and consolidation  Market share gains in relevant segments  Selective growth (new markets)  Consolidation of investments made in the network Growth in highly competitive markets:  Long Distance (domestic and international)  Data & Corporate (nationwide)  GSM Mobile Services (Region I) Exploring new opportunities:  Broadband  Bundled services  Satellite services  Agreements and Partnerships Target: Ensure a sound financial position, with increasing returns to our shareholders. Building a fully integrated telecom service provider Change, adaptation and consolidation  Market share gains in relevant segments  Selective growth (new markets)  Consolidation of investments made in the network Growth in highly competitive markets:  Long Distance (domestic and international)  Data & Corporate (nationwide)  GSM Mobile Services (Region I) Exploring new opportunities:  Broadband  Bundled services  Satellite services  Agreements and Partnerships Target: Ensure a sound financial position, with increasing returns to our shareholders. 2.1 Highlights –2003/2004

14. 7 th Annual Latin America Conference - September/2004 www.telemar.com.br/ir 13 Ability to anticipate mobile traffic migration presenting an outstanding performance in customer base; Capacity to maintain stable fixed line platform while increasing market share in new businesses (LD,Data, ADSL and Mobile). Ability to anticipate mobile traffic migration presenting an outstanding performance in customer base; Capacity to maintain stable fixed line platform while increasing market share in new businesses (LD,Data, ADSL and Mobile). million *Company’s acquisition 2.2 Expansion of Customer Base CAGR (98-03) 19.5% Wireline Wireless 19.2 16.4 20.6 22.2 0.5 1 0.3 1 Target: 450,000 ADSL subscribers by YE 2004. 0.2 ADSL

15. 7 th Annual Latin America Conference - September/2004 www.telemar.com.br/ir 14 Investments for expansion of fixed line network essentially completed; Fully digital platform:  78% household lines  18% business lines  4% public phones Wireline penetration: ~55% of households (Region I); Obstacles : Further increases in wireline penetration subject to GDP growth and regulatory changes. Investments for expansion of fixed line network essentially completed; Fully digital platform:  78% household lines  18% business lines  4% public phones Wireline penetration: ~55% of households (Region I); Obstacles : Further increases in wireline penetration subject to GDP growth and regulatory changes. million lines 2.2 TMAR Fixed Lines in Service growth maintenance

16. 7 th Annual Latin America Conference - September/2004 www.telemar.com.br/ir 15 Most successful GSM launch globally  5.3 million subs in 25 months; 21% market share (Region I); Share of mobile revenue in total consolidated business grew from 3% in 2002 to 8% in 1H04. Most successful GSM launch globally  5.3 million subs in 25 months; 21% market share (Region I); Share of mobile revenue in total consolidated business grew from 3% in 2002 to 8% in 1H04. 2.2 Oi´s Subscriber Base million subscribers Gross Revenue (R$ million) Pre paid Post paid 1.7 2.2 2.8 80% 83% 78% ~6.5 3.9 85%85% 4.4 5.3 85%85%

17. 7 th Annual Latin America Conference - September/2004 www.telemar.com.br/ir 16 2.2 Oi´s Market Position ^Includes other operators:Telemig Celular, Tele Norte Celular, Nextel, CTBC, and SERCOMTEL. Source: Teleco /Morgan Stanley. Market Share (Brazil v. Region I) – Jun/04 Wireless Penetration (%) – Jul/04 * *Source: Pyramid Research Brazil Region I Even with increased competition, Oi remains a high growth player in its operating market (35% of all net adds in 2Q04); Wireless penetration in Region I (25%) still offers significant growth potential; Challenge : Grow subscriber base by 65% in 2004, with positive EBITDA margins. Even with increased competition, Oi remains a high growth player in its operating market (35% of all net adds in 2Q04); Wireless penetration in Region I (25%) still offers significant growth potential; Challenge : Grow subscriber base by 65% in 2004, with positive EBITDA margins.

18. 7 th Annual Latin America Conference - September/2004 www.telemar.com.br/ir 17 Highest ADSL growth in Brazil (~37% of net adds/2003); Annual revenue growth of 288% in 1H04, but still a low portion of fixed line revenues (1.6%); Target : Increase ADSL penetration from 1.9% of fixed lines to 5% in 2-3 years. Highest ADSL growth in Brazil (~37% of net adds/2003); Annual revenue growth of 288% in 1H04, but still a low portion of fixed line revenues (1.6%); Target : Increase ADSL penetration from 1.9% of fixed lines to 5% in 2-3 years. 2.2 ADSL Thousand lines Gross revenue (R$ million) 450

19. 7 th Annual Latin America Conference - September/2004 www.telemar.com.br/ir 18 Focus on profitability: EBITDA positive since inception; Growth in attendant positions, in line with increase in customer base and net revenues - Contax currently has 29 customers, including major banks, utilities, insurance, media, telecom, retail, excluding Telemar. Focus on profitability: EBITDA positive since inception; Growth in attendant positions, in line with increase in customer base and net revenues - Contax currently has 29 customers, including major banks, utilities, insurance, media, telecom, retail, excluding Telemar. 2.2 Call Center Services Attendant Positions 7,337 4,947 12,907 Net Revenues (R$ million) 223 421 146 >15,000 14,887 286

20. 7 th Annual Latin America Conference - September/2004 www.telemar.com.br/ir 19 2.3 Revenue Drivers The Company’s five main lines of businesses provide a healthy balance between stable cash flow and growth opportunities. Wireline Concession Area Moderate Growth Data, Internet & Corporate High Growth Wireless High Growth DLD / ILD High Growth Contact Center High Growth Integrated Strategy

21. 7 th Annual Latin America Conference - September/2004 www.telemar.com.br/ir 20 2.3 Consolidated Gross Revenue Breakdown 1H04 R$ 10,460 million 2003 R$ 19,427 million 2002 R$ 16,091 million F- M 17% Local 44% F- M 13% Local 40% F- M 13% Local 40% F- M 15% Local 42% Local Service decreased its share from 61% in 2002 to 53% in 1H04; Real growth has been driven by competitive and less regulated segments of mobile, long distance and data:  LD services increased its share from 13% in 2002 to 17% in 1H04;  Mobile service rose from 3% in 2002 to 8% in 1H04 and  Data increased its share from 6% in 2002 to 7% in 1H04. Local Service decreased its share from 61% in 2002 to 53% in 1H04; Real growth has been driven by competitive and less regulated segments of mobile, long distance and data:  LD services increased its share from 13% in 2002 to 17% in 1H04;  Mobile service rose from 3% in 2002 to 8% in 1H04 and  Data increased its share from 6% in 2002 to 7% in 1H04.

22. 7 th Annual Latin America Conference - September/2004 www.telemar.com.br/ir 21 2.3 Consolidated Gross Revenue Revenue growth driven by less regulated/ highly competitive business (Mobile, LD & Data); Revenue growth in regulated services basically driven by tariff increases; Share of less regulated/competitive services increased from 27% to 32% of total revenues (1H03/1H04); Expected growth in wireless, data and LD in 2004 should further increase that share. 9,023 10,460 1H03 1H04 +7% +40% Regulated Less regulated* R$ million * Services offered in highly competitive markets, less affected by regulation. +16%

23. 7 th Annual Latin America Conference - September/2004 www.telemar.com.br/ir 22 Telemar continues gaining market share and holding its market leadership in Region I. 2.3 Long Distance Services 1,568 2,066 2,963 13% 15% LD Gross Revenue - R$ million LD Traffic (billion minutes) Contribution to Total Revenues (includes F2M) 7.1 8.2 9.5 CAGR 17.9% +31.7% 11% 1,347 1,774 15% 17% CAGR 37.5%

24. 7 th Annual Latin America Conference - September/2004 www.telemar.com.br/ir 23 Key corporate and government contracts won in 2003; Data revenue growth driven by ADSL and IP services; Target : Increase market share in data services for Region I and extend comprehensive offer on nationwide basis. Key corporate and government contracts won in 2003; Data revenue growth driven by ADSL and IP services; Target : Increase market share in data services for Region I and extend comprehensive offer on nationwide basis. 2.3 Data Services Major Clients won in 2003 Data Revenues (gross) - R$ million +31.6% CAGR 22.7%

25. 7 th Annual Latin America Conference - September/2004 www.telemar.com.br/ir 24 Outstanding revenue increase (69% yoy); Services growth driven by subscriptions, outgoing calls & data services (mainly SMS); EBITDA breakeven reached in Dec/03, after 18 months of operations; Target : Maintain a high revenue growth rate with increasingly positive EBITDA margins. Outstanding revenue increase (69% yoy); Services growth driven by subscriptions, outgoing calls & data services (mainly SMS); EBITDA breakeven reached in Dec/03, after 18 months of operations; Target : Maintain a high revenue growth rate with increasingly positive EBITDA margins. 2.3 Mobile Services Revenue* R$ million Handsets 511 866 1H03 1H04 Services * Refer to gross consolidated revenues (excluding Intercompany transactions).

26. 7 th Annual Latin America Conference - September/2004 www.telemar.com.br/ir 25 R$ million 2.3 Consolidated Net Revenues and EBITDA Delivering consistent revenue and EBITDA growth in spite of huge expansion of fixed line platform and startup of mobile business; Recurring margins stable over time, in the mid-40’s  EBITDA 2001 impacted by extraordinary provisions; Target 2004 : Keep consolidated EBITDA margin at ~43% in spite of a higher growth in mobile revenues. Delivering consistent revenue and EBITDA growth in spite of huge expansion of fixed line platform and startup of mobile business; Recurring margins stable over time, in the mid-40’s  EBITDA 2001 impacted by extraordinary provisions; Target 2004 : Keep consolidated EBITDA margin at ~43% in spite of a higher growth in mobile revenues. Net Revenues EBITDA EBITDA Margin

27. 7 th Annual Latin America Conference - September/2004 www.telemar.com.br/ir 26 2.4 Consolidated CAPEX R$ billion CAPEX 2003: ~12% of net revenues (v. 17% in 2002); CAPEX 1H04: R$ 534 million (7.1% of net revenues); Consolidated CAPEX since 1998: US$10.4 billion; Target : Stabilize CAPEX at ~15% of net revenues to support growth in mobile and other services (broadband, long distance). CAPEX 2003: ~12% of net revenues (v. 17% in 2002); CAPEX 1H04: R$ 534 million (7.1% of net revenues); Consolidated CAPEX since 1998: US$10.4 billion; Target : Stabilize CAPEX at ~15% of net revenues to support growth in mobile and other services (broadband, long distance). 10.1 2.0 1.7 Wireline Wireless Anatel Targets/ Mobile License (R$1.1 bn) 2.0 1.1 0.9 1.1 2.8 2.2 2.5 0.6 60% 40% 2.2 7.9 0.5

28. 7 th Annual Latin America Conference - September/2004 www.telemar.com.br/ir 27 2.4 Free Cash Flow after CAPEX R$ million 1999 20002001 2002 2003 Having met fixed line universal service goals and successfully rolled out GSM services, our FCF is expected to remain strong in the coming years. CAGR (99-03) 69.1% 1H04 1H03

29. 7 th Annual Latin America Conference - September/2004 www.telemar.com.br/ir 28 2.4 Dividend Payments - 1999/2003 Dividend yield Dividend/ Interest on Capital Our goal is to continue to provide high cash returns to our shareholders. * Based on stock prices at 08/31/04. R$ million * Dividend Policy All shares have the right to receive a minimum annual payment of 25% of adjusted net income; Preferred Shares and ADR are entitled to a minimum dividend of:  6% of the Company´s Capital;  3% of the Company´s Shareholders´ Equity Whichever is higher. Dividend Policy All shares have the right to receive a minimum annual payment of 25% of adjusted net income; Preferred Shares and ADR are entitled to a minimum dividend of:  6% of the Company´s Capital;  3% of the Company´s Shareholders´ Equity Whichever is higher.

30. 7 th Annual Latin America Conference - September/2004 www.telemar.com.br/ir 29 2.4 Debt Position R$ billion % of total 12.122.6 28.011.4 6.4 Net Debt – Jun/04 Repayment Schedule – Jun/04 Given our strong cash generation, we estimate net debt to be less than 1x EBITDA by year end 2004. 19.5 R$ 7.4 billion Total Debt: R$ 12.2 billion Net Debt/ EBITDA (x) ~

31. 7 th Annual Latin America Conference - September/2004 www.telemar.com.br/ir 30 2.4 Key Financial Ratios Net Debt / EBITDA Amortization*/ EBITDA (%) Dividends* / EBITDA (%) CAPEX / EBITDA (%) * includes JCP (interest on capital) (*) 12 - Month EBITDA * Principal and interest * Early attainment of universal service targets. *

32. 7 th Annual Latin America Conference - September/2004 www.telemar.com.br/ir 31 Enterprise Value / EBITDA Market Cap / EBITDA EBITDA / Net Interest Expense EBITDA / Total Debt Service 2.4 Key Financial and Valuation Ratios

33. 7 th Annual Latin America Conference - September/2004 www.telemar.com.br/ir 32 Investor Relations Rua Humberto de Campos, 425 / 8º andar Leblon Rio de Janeiro -RJ Phone: ( 55 21) 3131-1314/1313/1315/1316 Fax: (55 21) 3131-1155 E-mail: invest@telemar.com.br Visit our website: http://www.telemar.com.br/ir 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 “Safe Harbor” Statement