HIGHLIGHTS

• The implementation of the GSM network and it’s commercial operation has been a great success. At the close of September, the Company had more than 6.7 million  GSM handsets;
  
  
• Also at the end of September, the customer base reached 31,320,000 clients, ensuring our leadership in our operating area, with a market share of 36.8%. Our market share for Brazil as a whole was 27.8%;
  
  
• Vivo has the country’s biggest handset distribution network, with almost 8,000 points of sale, and the largest recharge network, with more than 347,000 points of sale;
  
  
• Nationwide digital coverage and a broad portfolio of solutions in GSM/EDGE and CDMA/EV-DO technologies;
  
  
• The “Vivo Escolha” plans have already been adopted by 63% of our postpaid customer base, contributing to customer base growth, increased customer loyalty and higher revenue. A survey by the Brazilian Consumer Rights Association (PRO TESTE) showed that Vivo had the most competitive prices in Brazil’s entire mobile communications market.
  
  
• Service Revenue of R$2,845.8 million, an increase of 15.3% over 3Q06 and of 7.5% over 2Q07;
  
  
• EBITDA grew 31.4% in 3Q07, reaching R$ 833.3 million, with EBITDA Margin of 25.7%, up 4.7 percentile points in relation to 2Q07;
  
  
• The provision for bad debt was R$ 80.4 million in the quarter, representing 1.7% of the gross revenue, a reduction of 45.6% in relation to 3Q06 and of 20.6% in relation to 2Q07;
  
  
• The operating cash flow plus the change in working capital recorded  R$ 961.8 million in the year-to-date figure, materially contributing to the increase of the company’s economic value;
  
  
• The net debt recorded the amount of R$2,957.7 million in 3Q07, representing a reduction of 28.7% in relation to 3Q06;
  
  
• Net Profit of R$ 4.4 million in the quarter, reverting the position recorded both in 3Q06 and in 2Q07.
  
  

Excellent cash generation,
increasing
Vivo’s economic
value

Operating cash flow (EBITDA-CAPEX) of R$ 464.1 million in the quarter, with a growth of 71.4% in relation to 3Q06, when compared to 2Q07 it recorded an increase of 56.3% which, added to the change in working capital, generated R$ 527.5 million in the quarter, which is 54.8% higher than the figure recorded for the same period of the previous year, which was R$ 340.7 million. The year-to-date operating cash flow plus the change in current assets recorded R$ 961.8 million, an increase of 116.3% when compared to the same period of the previous year. This flow, which is the result of a simple and reasonable structure, allied to the constant search for better efficiency and, mainly, higher revenue, has significantly increased Vivo’s economic value.

GSM/EDGE
Network already
covers 2,303
municipalities.

The necessary activities for the GSM/EDGE overlay were almost concluded in this quarter, with more than 90% of the total CapEx estimated in the initial project having been invested up to the moment. A total of R$ 369.2 million were invested in 3Q07, which were intended for maintenance of networks and systems quality and capacity, expansion of coverage and terminals into the corporate segment, among other things. The 3Q07 CapEx represented 11.4% over the net revenue. The year-to-date invested total was R$ 941.9 million, represented 10.3% the net revenue.

Customer base quality enables ARPU growth in
the quarter

• Continued leadership with an increase in the customer base by 9.0% in relation to 3Q06 and 3.6% in relation to 2Q07, reaching 31,320 thousand customers. The varied range of offers and service plans made available by Vivo, together with the recognized quality in the rendering of services contributed to such growth. Vivo continued with its strategy to keep a strict control over its customer base, without, however, disregarding assistance quality and coverage maintenance. Worthy of mention, further, is the progressive increase in sales of GSM handsets, which have already exceeded 6.7 million handsets.
  
  
• Net additions in 3Q07 totaled 1,079 thousand new customers, with a market share of net additions of 26.4% in its coverage area, keeping its market leadership both in its operational area and in the national market. Once again the activations of GSM technology, which represent 77% of total activations, contributed to the steady and consistent growth.
  
  
• Vivo has now available 12 exclusive handsets, which contributed to differentiated offers.
  
  
• In the same manner, the growth in the ARPU, which recorded R$ 30.8 evidences the quality of Vivo’s present customer base even though in a period of intense growth of the customer base.
  
  
• The company has continued to place its focus on capturing and keeping high and medium value customers, maintaining rationality and searching for positive results in each campaign and commercial action.
  
  

• SAC in the quarter, of R$ 115, is a result of enhanced selling efforts and “entry barriers” implemented in the period, partially diluted by lower advertising expenses. The growth in the quarter is also a result of the strategy to capture high-value customers, especially in medium and high value handsets.
  
  

Quality of services rendered and
reward programs contributed to
Churn reduction

• Churn of 2.2% in the quarter, with a reduction of 0.4 percentile points in relation to 3Q06 and a slight drop when compared to 2Q07. The value segment, the mostly targeted by competition, represented by “premium” customers, was maintained under strict control with specific actions aiming at retaining and capturing customers. This result shows the drop trend of churn and validates the actions implemented with a view to maintain and keep customer base quality. In the loyalty campaign, the use of the recognized reward program contributed to the renewal of customer handsets and to the increased satisfaction with services rendered.

ON-NET traffic increase through specific campaigns.

Sustained growth of the outgoing traffic.

Customer base quality improvement increased the ARPU by R$31

Vivo Escolha, the most competitive plans in the Brazilian mobile communications market

• The blended MOU remained stable in the quarter. The 7.7% increase in the outgoing MOU contributed to dilute the slight drop in the Blended MOU in relation to 3Q06, which was due to the campaigns for stimulating use for the prepaid segment, adoption of new service plans and segmented campaigns. The inbound traffic, which in several markets records a decreasing trend, in the case of Vivo has recorded an increase in relation to the compared periods.

• The total traffic recorded a 5.2% growth in 3Q07 in relation to 2Q07, emphasizing the 5.6% growth in the outgoing traffic. In the comparison between 3Q07 and 3Q06, the total traffic increased by 7.5% and considering only the outgoing traffic the increase is 14.8%. The inbound traffic stability arises mainly from the increase in the off-net mobile-mobile and long-distance traffic, showing each time more the increase in mobile access as a means of personal communication, offsetting the trend of decrease in the fixed-mobile traffic market.

• The blended ARPU recorded the amount of R$ 30.8 in 3Q07, the highest figure recorded since the conclusion of the corporate reorganization in February 2006, a 3.0% increase in relation to 2Q07 and 7.3% in relation to the same period of the previous year. Following the trend mentioned for the MOU, the outgoing ARPU increased by 10.5% over 3Q06. By eliminating the effects of termination of the partial Bill&Keep system, the blended ARPU in 3Q07 even though would record 2.4% increase in relation to 3Q06.
  
  

• The highly successful “Vivo Escolha” plans played a vital role in increasing the competitiveness of the Company’s services. The Brazilian Consumer Rights Association (Proteste) has just published an independent survey which confirmed that Vivo’s plans are the most economical for different usage profiles in all the regions in which it operates, being the only ones that permit customization with free add-ons, which is most important for the client.

Consistent growth in the revenue from the outgoing traffic.

Growth of data revenue and VAS.

Service revenue grew 15.3%, increasing the total net revenue by 15.0% in relation to 3Q06, recording R$ 3,248.5 million in the quarter. In relation to 2Q07, the total net revenue grew by of 7.5%, especially due to the increase in the revenue from subscription and usage. By eliminating the effects of the partial Bill&Keep in the 3Q07, the net service revenue would still record an increase of 12.7% in 3Q07 over 3Q06.

The increase of 17.6% in “subscription and usage revenue”, when compared to 3Q06, is mainly due to the increase in the total outgoing revenue, which was due to the growth in the total outgoing traffic, by the incentive to usage and promotions and, especially, by the success of the “Vivo Escolha” plans, which plans, besides stimulating usage and loyalty, also increase profitability and customer satisfaction. When compared to 2Q07, there was 9.0% increase in the subscription and usage revenue, as result of customer base increase and incentive to usage with segmented campaigns.

Data revenue plus VAS accounted for 8.3% of the service revenue in 3Q07, a 33.8% increase over 3Q06. In the comparison between 3Q07 and 2Q07, it recorded an increase of 12.5%. Data Revenue plus VAS have had a sustained growth due to actions that stimulate usage of the present services (such as SMS, VIVO AVISA, Voice Mail and Voice Portal), with the continuous increase of our offer in the WAP, in contents and game downloads (inclusion of new and relevant partners), with VIVO ZAP solutions (EV-DO PMCIA and USB boards) and with the launching of innovative products and services, such as complete song downloading in VIVO PLAY. Vivo continues to be Brazil’s leading music sales portal (complete music downloads), having formed partnerships with SonyBMG and Sonora (Terra’s music site).

Strict control over manageable costs.

The growth of 0.3% in Human Resources  in 3Q07 over 3Q06 is due to the adjustment provided for the Collective Union Agreement in November 2006, attenuated by a reduction in the labor count occurred in previous quarters. The same cost, when compared to 2Q07, recorded 8.3% reduction arising out of the result of the same reduction in the labor count and the reduction in severance payments.

By eliminating
the effects of termination of
the B&K program, the services costs would be reduced
by 4.4% in relation to 3Q06.

The increase of 17.4% in the cost of services rendered in 3Q07, when compared to 3Q06, is due to the 27.8% increase in interconnection costs arising out of the termination of the partial Bill&Keep system, the increase in expenses with third-party services, in addition to an increase resulting from the provision for losses from roaming services. When compared to 2Q07, it recorded an increase of 2.8% also due to the increase in interconnection costs, besides the variation in expenses with property rental, partially offset by a reduction in the expenses with third-party services, especially public utilities and plant maintenance.

The cost of goods sold increased by 14.3% in 3Q07 over 3Q06, especially due to an increased number of gross activations which accounted for 29.5% growth. In relation to 2Q07, even with less commercial activity, the additions and exchanges in GSM technology, in both segments, recorded in an increase higher than the 6.7% recorded in the cost of goods sold.

In 3Q07, selling expenses increased by 4.5% in relation to 3Q06, as a result of the increase in third-party expenses (publicity and advertising, in addition to agency and commissions), due to the larger number of activations, being offset by a constant reduction in expenses with the provision for bad debt. When compared to 2Q07, it remained stable, especially due to the reduction in the provision for bad debt.

45.6% reduction in the PDD in relation to the same period of the previous year.

The Provision for Bad Debt – PDD in 3Q07 was of R$ 80.4 million, representing 1.7% of the total gross revenue, a 45.6% reduction in relation to the same period of the previous year, which was R$ 147.8 million, representing 3.7% of the gross revenue. When compared to 2Q07, which recorded R$ 101.2 million, the reduction was of 20.6%. This result evidences the strict control exercised over new customers and on debt collection.

General and administrative expenses increased by 41.3% in 3Q07 in relation to 3Q06, due, mainly, to the increase in expenses with third-party services, especially technical assistance, partially offset by a reduction in expenses with consulting and regular services due to efficiency gains. When compared to 2Q07, it represents a reduction of 1.4% arising out of the reduction in third-party services, especially data processing and plant maintenance.

Other Operating Revenue / Expenses recorded an expense of R$ 10.8 million. The variation in relation to 3Q06 arises from the increase in the expenses with taxes, duties and contributions, in addition to a reduction in the revenue from recovered expenses, partially diluted by the increase in the revenue from  commercial incentives. When compared to 2Q07, the 56.5% is due to an increase in revenues from recovered expenses and commercial incentives, partially impacted by the increase in taxes, duties and contributions and a reduction in revenues from penalties.

EBITDA margin
of 25.7% in the quarter, 4.7 percentile points higher.

The EBITDA (earnings before interests, taxes, depreciation and amortization) in 3Q07 was R$ 833.3 million, an increase of 16.4% in relation to 3Q06, resulting in an EBITDA Margin of 25.7%. When compared to 2Q07, the EBITDA recorded a 31.4% increase, with an EBITDA Margin of 4.7 percentile points higher. Such result recorded in 3Q07 was mainly due to the increase in the revenue due to the increase in the customer base and to the strict control of expenses, even though considering the number of additions and the sustainable growth. The stability in the cost of goods sold also contributed to such increase, explained by the sales of GSM handsets at lower acquisition cost.

Depreciation and amortization expenses recorded reductions of 7.1% and 1.8%   when compared to 3Q06 and 2Q07, respectively, due to the end of the useful life of the assets along the periods.

Reduction in financial expenses
by 43.6% in 3Q07 over 3Q06.

VIVO’s net financial expense in 3Q07 was reduced in relation to 2Q07. The R$ 10.6 million reduction was due to lower net debt in the period. In the comparison of 3Q07 over 3Q06, there was a reduction of R$ 87.8 million in the net financial expense due to decrease in net debt, occasioned by increase in operating cash flow generation and restructuring of financial liabilities, besides a reduction in interest rates in the period (3.51% in 3Q06 and 2.78% in 3Q07).

Reduction in net debt by 28.70% in the year-to-year comparison and by 14.1% in gross debt.

On September 30, 2007, VIVO’s debts related to loans and financing amounted to R$ 4,038.4 million (R$ 3,705.7 million at June 30, 2007), 36% of which is denominated in foreign currency. The Company has executed (swaps and hedging) contracts thus protecting 100% of its financial debt against foreign exchange volatility, so that the final cost (debt and swap) is Reais-referenced. Additionally, the Company has entered into swap transactions – CDI Post x Pre fixed, in order to partially protect it against fluctuations in domestic interest rates. Covered transactions totaled R$ 1,704.4 million. (R$ 2,274.0 million at June 30, 2007). This debt was offset by the Company’s available cash and financial investments (R$ 1,588.3 million) and by derivative assets and liabilities (R$ 507.6 million payable) resulting in a net debt of R$ 2,957.7 million.

The 14.1% reduction in VIVO’s gross debt in relation to 3Q06, amounting to R$ 661.2 million, is due to the generation of cash, financial flexibility and rationality.

Debt reduction
due to cash generation

The reduction in Net Debt is due to a better generation of operating cash, arising mainly from the growth in Operating Revenue, the net Revenue in 3Q07 was R$ 3,248.5 million, against R$ 3,021.0 in 2Q07.

Net Profit of R$ 4.4 million in the quarter, reverting the position recorded both in 3Q06 and in 2Q07. In the year-to-date, a reduction of 85.3% in its loss was recorded.

Capital Market

The shares of Vivo Participações were traded in 100% of the trading floor sessions of the São Paulo Stock Exchange in this quarter, with the common shares having devaluated by 3.3% while the preferred shares devaluated by 7.8%. Vivo’s shares recorded 1.2% appreciation in the year-to-date figures for ON shares and 1.6% for PN shares.

Acquisition of
Telemig
Participações
and of Tele Norte Participações.

On August 2nd, VIVO entered into a stock purchase and sale agreement with Telpart Participações S.A. (“Telpart”) aiming at the acquisition of the share control of Telemig Celular Participações S.A. (“Telemig Participações”) and of Tele Norte Celular Participações S.A. (“Tele Norte Participações”), corresponding to 22.72% and 19.34% of their respective total capital stock, for an aggregate total of R$ 1.2 billion, subject to certain adjustments set forth in the stock purchase agreement. Additionally, Vivo will purchase from Telpart stock subscription rights for R$ 87 million. The agreement was approved at the general meetings of shareholders of Vivo and Telpart, among other conditions precedent, and its closing is subject to approval by ANATEL.

The Board of Directors of Anatel, on October 23, unanimously approved the acquisition of Telemig by Vivo. Thus, we will be able to extend our quality signal to the now Vivo customers in Minas Gerais.

As for the Amazon region, we are currently awaiting the approval by the regulatory agency in order to acquire the share control of the Company.

Further information about the transaction, the public offerings of common shares and the voluntary public offerings of preferred shares are available from Vivo’s web site – Investor Relations (www.vivo.com.br/ir).

Better connection
and coverage
quality

VIVO has continued significantly expanding its coverage, increasing the number of municipalities served, in addition to enlarging and optimizing the 1xRTT coverage and installing the new GSM/EDGE network convertible into W-CDMA. Vivo Participações, through its wholly-owned subsidiary, Vivo S/A, the largest operator in Brazil, provides mobile telephone services in the states of São Paulo, Paraná, Santa Catarina, Rio de Janeiro, Espírito Santo, Bahia, Sergipe, Rio Grande do Sul, Acre, Amazonas, Amapá, Goiás, Maranhão, Mato Grosso, Mato Grosso do Sul, Pará, Rondônia, Roraima and Tocantins and in the Federal District. Digital coverage is provided in 100% of the municipalities comprised in its service area, with more than 2,000 municipalities having 1xRTT coverage, of which 27 municipalities are provided with EV-DO service. The GSM/EDGE network is already present in 2,303 municipalities. Some states as São Paulo, Rio de Janeiro and Espírito Santo are already served by Vivo in 100% of their municipalities.

Nationwide
coverage has now become a reality

With the 1.9 GHz frequencies won in the Anatel auction, Vivo achieved one of its major goals: nationwide operation, being able to reach the Northeast states in which it did not operate, and further reinforce its quality signal in the regions where it already operated, as a result of the acquisition of further spectrum.

Main Prizes,
Awards and
Events

For the third consecutive year, Vivo is chosen as the most valuable brand in cellular phone in Brazil, having recorded the value of R$ 2.25 billion, according to the ranking prepared by Brand Finance, an English consulting firm. With an increase of 28.6% in relation to the 2006 study, Vivo is ahead of strongly positioned brands of companies from other market segments.

Another recent achievement was the Reliable Brands prize awarded by Seleções magazine, based on an Ibope Institute research. Vivo was considered the most reliable brand in cellular phone, which is an evidence of its successful repositioning strategy, focused on quality and customer satisfaction.

Vivo has sponsored for the 9th year the Gramado Movie Festival, main event in this industry in Latin América, which attracts the industry professionals and millions of tourists to the Rio de Grande do Sul state mountains. Vivo has also sponsored the Troféu Oscarito, which was awarded this year to actress Zezé Motta. Finally, it developed inclusive actions, with a special session of “Basic Sanitation” movie for visually and hearing disabled people.

 Social
Responsibility

With new services turned to visually disabled people, production of Braille materials and audiobooks, Vivo has progressed in its inclusive practices. During the event called “Eu Vivo Cinema Pan-Americano” (I live Pan-American Movie”), held in Ipanema Beach (RJ), during the Pan-American games, Vivo promoted the Inclusive Evening, with the exhibition of “The Year My Parents Traveled in Vacations” with audio description for visually disabled people made by volunteers trained inside the company itself. The movie also displayed captions in Portuguese for hearing disabled people.

In the end of July, taking advantage of the season of performances by ballet dancer Mikail Baryshnikov in Brazil, also sponsored by the Company, Vivo renewed its sponsorship to the Fernanda Bianchini Blind People Ballet Association, an entity engaged in the professional formation of visually disabled ballet dancers in Brazil.

In September, Vivo achieved the second place in the first edition of the 2007 Feelings Award, in the category of Honorable Mention – Companies. The prize was awarded for the Company’s case of actions related to social inclusion of visually disable people, developed by Vivo Institute together with Vivo’s Voluntary Program. The Feelings Award I is developed by the Association for Valuation and Promotion of Exceptional People (AVAPE), Feelings magazine and Record Radio and Television Network, with HSBC support.

Delivery of “Carta da Terra” in Braille and audiobook to the State Departments of Environment of 17 Brazilian states and the Federal District. There were 43 meetings held for promoting the relationship between Vivo and vice-governors, mayors, state and local government environment departments, representatives from the IBAMA, other state departments, the Brazilian Army, House of Representatives and the House of Councilors, in addition to 6 environment-related non-government entities.

Worthy of mention in the Waste Management Program is “Vivo’s Handset Recycling” Project, which is responsible for collecting handsets, accessories and cellular batteries in its owned stores, having been expanded to Vivo’s regional offices in ES, PR, SC and RS states, in the stores where it is already available in RJ, SP and DF, as well as the continuance and expansion of the Overlay Project in the regional stores of CO/N and RS.

VIVO – Investor Relations

Ernesto Gardelliano
Carlos Raimar Schoeninger
Janaina São Felicio

Information available in the website:  http://www.vivo.com.br/ir 

This press release contains forecasts of future events. Such statements are not statements of historical fact, and merely reflect the expectations of the company's management. The terms "anticipates," "believes," "estimates," "expects," "forecasts," "intends," "plans," "projects", "aims" and similar terms are intended to identify these statements, which obviously involve risks or uncertainties which may or may not be foreseen by the company. Accordingly, the future results of operations of the Company may differ from its current expectations, and the reader should not rely exclusively on the positions taken herein. These forecasts speak only of the date they are made, and the company does not undertake any obligation to update them in light of new information or future developments.