Glossary

ADR – (American Depositary Receipt) – Share receipts traded in the US capital markets, issued by companies whose headquarters are not in the United States. ADRs were created in order to provide foreign companies with access to American capital markets. There are three levels of ADRs, with rising requirements in terms of transparency and compliance with US standards. Level I ADRs are those with the lowest level of requirements; they are traded in the over-the-counter (OTC) market in the United States. Level II ADRs are traded in US stock markets. One should point out that no new shares are issued for these two first ADR levels. Finally, there are Level III ADRs, whose requirements are no different from Level II requirements, but which involve issuing new shares for obtaining new capital.

Anatel (Agência Nacional de Telecomunicações – National Telecommunications) – Agency This is the agency that regulates telecommunications in Brazil. It is in charge of fostering the development of telecommunications in the country, to ensure Brazil has an up-to-date and efficient infrastructure, capable of providing society with suitable and diversified services at a fair price, throughout the country. http://www.anatel.gov.br

ARPU (Average Revenue per User) – Monthly Average Revenue per User.

Average price – Average daily quotation of a share listed in a Stock Exchange market session.

Authorization – Providing services under a private system.

Balance-sheet – Accounting statement that includes assets, liabilities and the net worth of a Company. It refers to a full fiscal year.

BNDES (Banco Nacional de Desenvolvimento Econômico e Social – The Brazilian Development Bank) – BNDES is a federal government-owned company linked to the Ministry of Development, Industry and Foreign Trade. Its purpose is to provide long-term financing for projects that will help the country’s development. Its other objectives are to market machinery and equipment and to finance exports, in addition to strengthening the capital structure of private companies and the development of the capital market.

Since its establishment, on June 21, 1952, the BNDES has been financing major industrial and infrastructure undertakings. It holds an outstanding position in providing support for investments in agriculture, commerce and services, as well as for very small, small and medium-sized companies. It also supports social welfare investments targeting education and healthcare, family agriculture, basic and environmental sanitation and mass transport. http://www.bndes.gov.br

Book-entry shares – Registered shares of a Company, which do not involve the issue of share certificates and work as a banking account, where amounts are entered as debt or credit, not having physical movement of this document.

Bovespa – The São Paulo Stock Exchange.

Broker – The one that intermediates sale and purchase of securities.

Broker – Intermediates the purchase and sale of securities.

Brokerage firms – Financial institutions registered at the Brazilian Central Bank, which are members of stock or futures exchanges. They are authorized to trade securities or futures during market sessions.

Capital Increase – Incorporation of new funds or reserves into the company’s capital stock.

CBLC (The Brazilian Clearing and Depositary Corporation) – Non-listed corporation, based in São Paulo. Besides ordinary activities, CBLC manages the BTC (Securities Lending Program) and provides Fungible Assets Custody services. It is a self-regulatory organization, supervised by CVM.

Closing price – Last quotation of the day of a share listed in a Stock Exchange market session.

Common Shares (ON) – They entitle their holders to vote in the Company’s Shareholders’ General Meetings. In occasion of dividends distribution, the holders of common shares only receive their corresponding portions after the holders of preferred shares have received theirs.

Concession –Providing services under a public system.

Corporation –Company whose capital is divided into shares.

Corporation – A company whose capital is divided into shares.

CRC (Customer Relationship Center) – Created in 2001, it is TIM Sul’s customer service center, with both outbound and inbound telemarketing services.

Custodian Bank (ADRs) – The Custodian Bank is responsible for the issue, cancellation, sale, repurchase, redemption and revaluation of ADRs, collection and distribution of ADR holders’ rights and control of exchange rate transactions related to the ADR Program.

CVM – (The Brazilian Securities and Exchange Commission) -Federal body that rules and supervises the securities market. It was created by Law # 6385/76 to rule the securities market and the performance of its players (publicly held companies, financial mediators and investors).

Debentures – Securities issued by a Corporation to raise funds aiming at the financing of investment projects or debt rollovers. The profitability of each debenture depends on the features of each issuance.

Depositary Bank (ADRs) – A Bank based in the USA, which is responsible for all services involved in issuance ad transference of shares in a DR (Depositary Receipts) program. It is responsible for assisting the shareholders and for paying dollar-denominated dividends.

Disclosure – Announcement of information made by a Company, helping the investors’ decision process and increasing its level of protection.

Dividends – Rights held by the shareholders to participate in the Company’s earnings. Such participation varies depending on the number of shares held. Based on the results reached by the Company in a specific period of time, a percentage, to be defined by a Shareholders’General Meeting, will be paid to shareholders as dividends

Down market – When the stock exchange closing index is lower than the previous day closing index.

EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) – The company’s cash operating performance, excluding interest payments, depreciation, amortization and taxes.

Equity – List of assets and rights of an individual or company.

Ex-rights share – Shares whose rights have already been exercised. These rights may include dividends, bonuses and underwriting.

Fiscal Council – Its task is to supervise the Company’s financial situation. It is composed of at least three effective members and three alternate members, who have no connection with the Company.

GSM (Global System for Mobile Communications) – Digital Cellular Mobile Service, a system that stores and codes the data from the mobile phone, such as calls and user information, enabling a given user to be recognized in any country when using the GSM network. GSM was adopted as the European standard in the mid-eighties and was introduced commercially in 1992, operating in the 935-960 MHz frequency band for reception and the 890-915 MHz frequency band for transmission. The system has an open architecture, which allows the combination of equipment from different manufacturers, thereby enabling low prices. Implemented global investments in GSM, to date, are in excess of US$ 50 billion, reaching more than 57 million users in 98 countries; 45 million of these are concentrated in Western Europe alone (23 countries). GSM is currently the most popular standard implemented worldwide.

IBOVESPA – Index following the average evolution of shares prices traded at Bovespa – São Paulo Stock Exchange.

IGP-DI – General Price Index – Domestic Availability – Provided by the Getulio Vargas Foundation, it is the weighted average of the month’s prices in the domestic products market for the wholesale, consumption and civil construction segments. This index results from the combination of the Wholesale Price Index (IPA –¥ndice de Preços no Atacado), with a weight of 60%; the Consumer Price Index (IPC – ¥ndice de Preços ao Consumidor), with a weight of 30%, in Rio de Janeiro and São Paulo; and the Civil Construction Index (INCC – Índice Nacional da Construção Civil), with a weight of 10%.

IGP-M – General Price Index – Provided by the Getulio Vargas Foundation, this is the index that measures the fluctuation of prices in the domestic market and imported products in the wholesale, consumption and civil construction segments. This index results from the combination of: the Wholesale Price Index (IPA – ¥ndice de Preços no Atacado), with a weight of 60%; the Consumer Price Index (IPC – ¥ndice de Preços ao Consumidor), with a weight of 30%; and the Civil Construction Index (INCC – ¥ndice Nacional da Construção Civil), with a weight of 10%. The research on pricing is carried out between the 21st day of a given month and the 20th of the following month.

Liabilities – Liabilities include all obligations and debts of a Company.

Listed shares – Shares traded at stock exchanges.

Major shareholder – Shareholder who holds the Company’s stock control.

Maximum price – Highest quotation of the day reached by a share listed in a Stock Exchange market session

Minimum price – Lowest quotation of the day reached by a share listed in a Stock Exchange market session

Mobile Telephone Services Commitment Protocol – Implemented by Anatel and by the Brazilian mobile telephone service operators in 1999. It established rates and quality targets.

MOU (Minutes of Usage) – The monthly average number of minutes of use of each mobile phone user.

MTN (Message Transport Network) – Communication through messages, carried via the Internet. A service used by corporate customers.

NYSE (New York Stock Exchange) – The largest and most important stock exchange in the world. Also known as the Big Board, it is self-ruled by a board composed of 20 members who monitor and rules the trading activities of more than 3,000 American and foreign companies.

Opening price – First quotation of the day of a share listed in a Stock Exchange market session.

Overlay – Mobile telephony superimposing networks.

Portfolio of shares or securities – List of shares or securities owned by individuals or entities

Preferred Shares (PN) – They entitle their holders priority when receiving dividends (usually the dividends percentage for preferred share holders is higher than the percentage for common shares holders) and when receiving back the capital in case of dissolution of the Company.

Publicly Held Company – Rede de Transporte de Mensagens – Company whose stock capital is represented by shares that can be traded at stock exchanges. Such capital stock is spread among several shareholders.

Quarterly Trial Balance Sheet – Partial balance of a Company’s main accounts. It is an accounting statement that includes assets, liabilities and net worth of a Company, submitted on quarterly basis to Stock Exchanges, the Brazilian SEC and the Brazilian Central Bank.

Quotation – Price of securities, shares, foreign currencies or commodities.

Received Call – A call placed by users of other telecommunication operator to a TIM user.

SAC – (Subscriber´s Acquisition Cost) – Average amount spent by the Company to conquer a new user.

Securities and Exchange Commission – It is body that rules, control and supervises the US market, aiming to protect the investor and maintain the integrity of the US securities market.

Sent Call – A call placed by TIM Sul users to users of other telecommunications operators.

Share or securities portfolio – A set of shares or marketable securities owned by individuals and legal entities.

Share – It is a variable income bond, issued by companies or corporations, which represents the minor fraction of the capital stock of the issuing company. The investor who holds shares of a company is its co-owner, participating in its results. Shares may be converted into cash at any time through negotiations at over-the-counter market or at stock exchanges.

Shareholder – The holders of shares of a Corporation.

SMC (Mobile Cellular Service) – Mobile telecommunication services on land, open to public correspondence and based on a system of radio communication with mobile technology, interconnected with the public telecommunications network, and accessed by means of portable terminals, whether transportable or vehicle-based, for individual use. In Brazil, the SMC operates in the 800 MHz (or 0.8 GHz) frequency band. It is the mobile phone service that is currently being used. The SMC is a service provided under a public system (concession).

SMP (Personal Mobile Service) – SMP is a service whose chief features consist of enabling communication between two stations belonging to the same SMP Registration Area and providing access to collective telecommunications networks. It is a new service created by Anatel in June 2000 for mobile communications, with a new operating frequency (1.8 GHz). The two services (SMC and SMP) are expected to co-exist for a relatively long period of time, but Anatel intends to foster gradual migration to the new service. By the end of December 2002, 19 operators, including TIM Sul, had signed the Authorization Agreement whereby they became authorized Mobile Personal Service (SMP) operators. Thus, these operators ceased to render services under a public system (concession) and work under a private system (authorization), thus enjoying the corresponding regulatory benefits, such as freedom to set pricing and the possibility of taking part in mergers and incorporations even before the five-year term established in Brazil’s current laws has expired.

SMS (Short Message Service) – SMS is the English abbreviation of “short message service”. It allows users of mobile telephone services to receive several types of information on their handsets by means of a text message. More than a function, SMS is currently the most dynamic business model within the wireless mobile telecom industry. Originally, SMS was limited to sending text messages not exceeding 160 characters via GSM networks. However, as a result of its rising popularity, the use of SMS has grown exponentially. It has been estimated that the number of messages sent per month, worldwide, reached roughly 30 billion in early 2002. There are forecasts indicating that this number might rise to 70 billion over a four-year period. From the simple remittance of text and the inbound message alert function, to the availability of voice messages (and of a complementary customer support system, such as information on billing figures), SMS has evolved to the possibility of sending logos, pictures and tunes. In the same way as the arrival of SMS eclipsed paging services, it is expected that the arrival of the third mobile generation and the evolution of the concept to EMS (Enhanced Messaging Service) and later to MMS (Multimedia Messaging Service) will reveal further prospects for the use and commercial exploitation of novel services.

SPVS – (Sociedade de Pesquisa em Vida Selvagem e Educação Ambiental) – Wildlife and Environmental Education Research Society) – SPVS is a non-profit, non-governmental organization headquartered in the city of Curitiba, with three natural conservation areas in the north of the state of Paraná, where it carries out its projects. Established in 1984, SPVS’ activities are centered on research, environmental education, the recovery of degraded areas, the protection of species threatened with extinction, community participation and information interchange. All of its activities are carried out jointly with public institutions and private companies. SPVS has already carried out more than one hundred projects in eight Brazilian states. www.spvs.org.br.

Stable market – When the stock exchange closing index is in the same level as the previous day closing index.

Stock Exchange – Non-profitable civil association where securities are traded. Its main goals are: to maintain either the physical space or the electronic trading system working properly in order to assure the occurrence of securities purchase and sale transactions; preserve trading ethical standards; make detailed and rapid announcements of completed transaction.

TDMA – (Time Division Multiple Access) – A mobile network transmission method whereby each channel occupies a different time interval on the same frequency, for as long as the communication allocated to that particular channel lasts. It enables a large number of users to enjoy access simultaneously. TDMA can be both broad-band and narrow-band. In broad-band TDMA, all or most of the available band is assigned to each user for a given time interval, known as slot. Only one user has access to all (or most of) the band per time slot. In narrow-band TDMA, users have access to a small portion of the band for a given slot. Thus, several slots share a single carrier channel at the same time. In other words, it is shared by several users, each of which has his own determined time slot.

TIMChip – TIMChip is a chip that centralizes the technology intelligence, working as there was a small computer inside the mobile phone. The client is not dependent of the mobile phone anymore, since all information and services utilized by the user is stored in the TIM Chip. It offers a high-security level, avoiding clones and improper listening. If the user decides to purchase a new mobile phone, all information will be maintained, including the phonebook.

Trial Balance Sheet – Accounting statement, which includes assets, liabilities and the net worth of a Company. It does not refer to the full fiscal year, but just to a specific period.

Underwriting – When a Company place new shares in the market in order to obtain necessary funds for an investment

Up market – When the stock exchange closing index is higher than the previous day closing index.

US GAAP – US Generally Accepted Accounting Principles. Accounting rules known and used in the USA, which should be observed by other countries companies that want to have their securities traded at US Stock Exchanges.

Volatility – It indicates the average level of variation of securities prices during a specific period of time.

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