Profile: Brasil Telecom S.A. (BTM)

Brasil Telecom S.A. is a provider of telecommunications services in Region II in Brazil. The Company offers integrated telecommunications services, which includes fixed-line and mobile telecommunications services, data transmission services (including broadband access services), Internet service provider (ISP) services and other services, for residential customers, small, medium and large companies, and governmental agencies. The Company provided services, which include Fixed-Line Telecommunications Services, Mobile Telecommunications Services, Data Transmission Services and other services.

Local Fixed-Line Services

As of December 31, 2008, the Company had approximately 8.1 million local fixed-line customers in Region II. Local fixed-line services include installation, monthly subscription, metered services, collect calls and supplemental local services. Metered services include local calls that originate and terminate within a single local area. Local fixed-line services also include in-dialing services (direct transmission of external calls to extensions) for corporate clients. For corporate clients in need of lines, the Company offers digital trunk services, which optimize and increase the speed of the customer’s telephone system.

Long Distance Services

The long distance services include fixed line-to-fixed line and mobile long distance services. The Company provides domestic long-distance services for calls originating from Region II through interconnection agreements, mainly with Telemar Participações S.A. (Telemar) in Region I and Telecomunicacoes de Sao Paulo S.A. (Telesp) in Region III, which permits the Company to interconnect directly with their local fixed-line networks, and through its network facilities in Sao Paulo, Rio de Janeiro and Belo Horizonte. It also provides international long-distance services originating from Region II through agreements to interconnect its network with those of the telecommunications service providers around the world. It also provides mobile long-distance services originating from Region II through interconnection agreements, with Telemar in Region I, Telesp in Region III, and each of the principal mobile services providers operating in Brazil that permits the Company to interconnect directly with their local fixed-line and mobile networks.

Mobile Telecommunications Services

As of December 31, 2008, the Company had approximately 5.6 million subscribers located in 1,015 municipalities in Region II. The Company offers Pula-Pula subscriptions to its pre-paid customers, which allow these customers to receive bonus minutes with each purchase of additional credits. The Company’s General Packet Radio Service (GPRS) and Enhanced Data Rates for Global Evolution (EDGE) services allow for mobile access to the Internet through mobile telephones, laptops or personal digital assistants. They also enable customers simultaneously to use voice and data services. As of December 31, 2008, the Company had launched 3G services in a total of 49 municipalities, including the Federal District and the nine state capitals in Region II, and had approximately 100,900 3G mobile broadband users.

Data Transmission Services

The Company provides a variety of data transmission services through various technologies and means of access. The Company’s commercial data transmission services include, Industrial Exploitation of Dedicated Lines (Exploracao Industrial de Linha Dedicada or EILD), under which it leases trunk lines to other telecommunications services providers, primarily mobile services providers, which use these trunk lines to link their radio base stations to their switching centers. Dedicated Line Services (Servicos de Linhas Dedicadas or SLD), under which the Company lease dedicated lines to other telecommunications services providers and corporate customers for use in private networks that link different corporate Websites. Internet Protocol (IP) services, which consist of dedicated private lines and dial-up Internet access, which it provides to the ISPs in Brazil, as well as Virtual Private Network (VPN) services, which enables its customers to operate private intranet and extranet networks. In addition, the Company provide services at its six cyber data center services located in Brasilia, Sao Paulo, Curitiba, Porto Alegre and Fortaleza. It also provides hosting collocation and Information Technology (IT) outsourcing at these centers, permitting its customers to outsource their IT structures to the Company or to use these centers to provide backup for their IT systems.

Network Usage Services (Interconnection Service)

The Company is authorized to charge for the use of its local fixed-line network on a per-minute basis for all calls terminated on its local fixed-line network in Region II that originate on the networks of other local fixed-line, mobile and long-distance service providers, and all long-distance calls originated on its local fixed-line network in Region II that are carried by other long-distance service providers. In addition, the Company charges network usage fees to long-distance service providers and operators of trunking services that connect switching stations to its local fixed-line networks.

Traffic Transportation Services

The Company offers long-distance usage service, called national transportation, under which it provides discounts to its long-distance network usage fees based on the volume of traffic and geographic distribution of calls generated by a long-distance or mobile services provider. It also offers international telecommunications service providers the option to terminate their Brazilian inbound traffic through its network, as an alternative to Embratel and Intelig Telecomunicaçoes Ltda. (Intelig). The Company charges international telecommunications service providers a per-minute rate, based on whether a call terminates on a fixed-line or mobile telephone and the location of the local area in which the call terminates.

Public Telephone Services

The Company owns and operates public telephones throughout Region II. As of December 31, 2008, the Company had approximately 227,900 public telephones in service, which are operated by pre-paid cards.

Value Added Services

Value-added services include voice, text and data applications, including voicemail and other services, such as personalization (video downloads, games, ring tones and wallpaper), short messaging service (SMS) subscription services (horoscope, soccer teams and love match), chat, mobile television, location based services and applications (mobile banking, mobile search, email and instant messaging). The Company also provides advanced voice services to its corporate customers, mainly 0800 (toll free) services, as well as voice portals where customers can participate in real time chats and other interactive voice services. The Company also operates an Internet portal under the brand name iG.

The Company competes with Empresa Brasileira de Telecomunicacoes (Embratel), GVT S.A. (GVT), Vivo Participacoes S.A. (Vivo), Telecom Americas Group, Telesp, TIM Participacoes S.A. (TIM) and Intelig.