TELE NORTE LESTE TELE NORTE LESTE PARTICIPAÇÕES S.A.PARTICIPAÇÕES S.A.

Salomon Smith Barney ConferenceSalomon Smith Barney Conference

March, 2002March, 2002

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TNLP: Heaviest Weighted Company in IBOVESPA

One of Leading LatAm ADRs’ in the NYSE (TNE)

Market Value: US$ 5.95 billion (December/01)

Free Float: 80% of Total Shares

Investment grade rating: Fitch and Moody´s

OverviewOverview

Largest Telco in Latin America: 14.8 million lines

Concession : 65% of Brazilian Territory

Population : 93 Million (54% Country´s total)

40% of Country’s GDP

Over 21 Million Households

Penetration : 16% ( 22% in Brazil)

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2001 Main Achievements2001 Main Achievements

Corporate Restructuring of wireline business;

Anticipation of Anatel´s 2003 targets;

Wireline operating restructuring;

Acquisition of PCS license for Region I;

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Consolidation (“16 1”);

Operational and administrative efficiency gains;

Better utilization of Fiscal Credits (R$ 890 million);

Market recognition – Animec award.

Corporate RestructuringCorporate Restructuring

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TELE NORTE LESTE

PARTICIPAÇÕES S.A

80.4% KT

17.6% KT

Corporate RestructuringCorporate Restructuring - Previous Shareholding Previous Shareholding StructureStructure

HICORP

OUTSOURCINGTNL ACESSO CONTAX TNEXTTNL PCS

TELEMAR

PARTICIPAÇÕES S.A

RIO DEJANEIRO

ESPÍRITOSANTO

MINASGERAIS

PIAUÍ

SERGIPE

MARANHÃO PARÁ

ALAGOASRIO GRANDEDO NORTE

CEARÁ

BAHIA

AMAPÁ

PERNAMBUCO

RORAIMA AMAZONAS

PARAÍBA

69%79% 81% 61% 69%86% 76% 64%

83% 78% 73% 64% 55% 81% 60% 75%

% over KT

Free Float

2% Treasury

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TELE NORTE LESTE

PARTICIPAÇÕES S.A

80.4% KT17.6% KT

HICORP

OUTSOURCINGTNL ACESSO CONTAX TNEXTTNL PCS

TELEMAR

PARTICIPAÇÕES S.A Free Float

TELEMARNorte Leste

Branches

Bahia

Sergipe Rio Grandedo Norte

Alagoas Pará RoraimaEspíritoSanto

Paraíba

Pernambuco

AmapáCeará

Piauí

MaranhãoMinasGerais

Amazonas

Rio de Janeiro

2% Treasury

Corporate RestructuringCorporate Restructuring – Current Shareholders´ StructureCurrent Shareholders´ Structure

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5,625 thousand new lines installed;

296 thousand public phones installed;

16,420 localities attended;

77 million inhabitants benefited from the program;

Over 97% digitalization rate;

Over 17 thousand km of optic fiber network;

US$ 9.7 billion CAPEX since privatization.

Anticipation of Anatel´s 2003 TargetsAnticipation of Anatel´s 2003 Targets

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Anticipation of Anatel´s 2003 targetsAnticipation of Anatel´s 2003 targets

Platform GrowthPlatform Growth

0,0

5,0

10,0

15,0

2002E

Lines in Service

Lines Installed(in millions)

20,0

1998

Utilization Rate (%)

1999 2000 2001 2002E

89%

92% 92%

82%

+/-90%

18.1

7.8 7.9

9.710.5

11.812.8

14.8

18.1

1998 1999 2000 2001

LIS +90%

LI +119%

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Centralization of operational systems;

Centralization of operational and administrative activities;

Better control and cost management;

Improvement of internal process;

Head count reduction.

Wireline Operating RestructuringWireline Operating Restructuring

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31,312

24,526 22,922

21,210

-

5.000

10.000

15.000

20.000

25.000

30.000

35.000

1998 1999 2000 2001 2002E

Wireline Operating RestructuringWireline Operating Restructuring

Total Employees (ex-Contax)Total Employees (ex-Contax)

Average Employees (ex-Contax)Average Employees (ex-Contax) Total Employees (ex-Contax)Total Employees (ex-Contax)

24,383 24,563

21,090

15,490

-

5.000

10.000

15.000

20.000

25.000

1998 1999 2000 2001 2002E

(40%)

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Acquisition of PCS license for Region I (March/2001);

Project Implementation = ready to launch;

USD 1.4 billion of suppliers and banks facilities;

R$ 2.2 billion CAPEX in 2001 (R$ 1.2 bn for license);

Brand name.

Acquisition of PCS license for Region IAcquisition of PCS license for Region I

Mobile Phone BusinessMobile Phone Business

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Revenue growth;

2001- Financial and Operational Results2001- Financial and Operational Results

Improvement in gross revenue per employee ratio;

Operating expenses;

Bad debt provision;

EBITDA;

Income statement.

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6,946

5,158

8,433

6,222

10,851

8,122

13,660

10,103

-

2.000

4.000

6.000

8.000

10.000

12.000

14.000

16.000

18.000

1998 1999 2000 2001 2002E

Gross Revenue Net Revenue

2001- Financial and Operational Results2001- Financial and Operational Results

Revenue Growth (R$ mm)Revenue Growth (R$ mm)

+97% (98/01)

CAGR (2001/98)

25.3%

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Gross Revenue per Employee Gross Revenue per Employee (R$ Thousand /year)(R$ Thousand /year)

Total directly employees (-) PCS (-) Contax

287,51345,86

514,49

907,25

-

200

400

600

800

1.000

1.200

1.400

1.600

1998 1999 2000 2001 2002E

15

-300

200

700

1200

1700

2200

2700

3200

3700

4200

4700

1998 1999 2000 2001

Cost of Services Selling Expenses G&A Others

Operating Expenses BreakdownOperating Expenses Breakdown

(R$ Million)(R$ Million)

40

17

33

10

33

21

27

19

38

30

32

-10

51

34

25

2,9772,774 2,460

4,328

%

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Bad Debt Provision (R$ Million)Bad Debt Provision (R$ Million)

2,8%

4,6%

10,6%

5,2%

1T01 2T01 3T01 4T01

5,1%*

812

114

212219

5.9%

2.5%

1.6%2.0%

0

100

200

300

400

500

1998 1999 2000 2001 2002E

0,0%

1,0%

2,0%

3,0%

4,0%

5,0%

6,0%

7,0%

Bad Debt Bad Debt/Gross Revenue

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End of Period

Total Partial

% of Total Lines in Service

Line Blocked & DisconnectedLine Blocked & DisconnectedBlocked Lines (in thousands)*

1,1871,152 1,185

945

6.4%8.1%

9.5%8.5%

Mar-01 Jun-01 Sep-01 Dec-01

Disconnected Lines (in thousands)

413472

636

767

1Q01 2Q01 3Q01 4Q01

= 2,288

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EBITDA (R$ Million)EBITDA (R$ Million)

0%

1998 1999 2000 2001

1,689

2,735

4,032 3,440

-

500

1.000

1.5002.000

2.500

3.0003.500

4.000

4.500

1998 1999 2000 2001

Margin (%)

34,1%

49,6%48,8%54,3%

20%

40%

60%

1998 1999 2000 2001

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Consolidated Income StatementConsolidated Income Statement

Plant growth

F-M Traffic growth

Debt increase

Var.R$ Millions 1999 2000 2001 01/00

Net Operating Revenue 6.222,3 8.126,9 10.103,1 24,3%

Operating Expenses 2.573,6 2.460,6 4.328,3 75,9%

Interconection Costs 916,4 1.634,8 2.334,6 42,8%

EBITDA 2.732,3 4.031,6 3.440,2 -14,7%

Depreciation and Amortization 2.757,4 2.802,0 2.926,4 4,4%

EBIT 97,9 1.229,6 531,4 -56,8%

Financial Result 42,3 39,5 325,5

Income before Tax and Social Cont. 12,1 1.206,0 203,8 -83,1%

Net Income 95,7 709,4 140,4 -80,2%

EPADR (R$) 0,29 1,90 0,37

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Cost Drivers:- Increase of operating efficiencies;- Headcount reduction;- Plant Maintenance

- Bad debt control

2002 OUTLOOK2002 OUTLOOK

Revenue Drivers: - Plant Expansion - New Services – LD

- New Markets

CAPEX reduction;

Net Debt forecast;

PCS roll out.

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2002 OUTLOOK -Revenue Drivers 2002 OUTLOOK -Revenue Drivers

Platform Expansion (mm)

7.89.7

11.8

14.8

1998 1999 2000 2001 2002

Lines in Service by year end

7.28.6

10.6

13.615.5/15.6

1998 1999 2000 2001 2002

Average Lines in Service

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• Internet Access • National & International Long Distance Calls • Data Business

New Businesses New Businesses Adding Value Adding Value

Region I

Region III

Region II

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2002 OUTLOOK2002 OUTLOOKCAPEX Reduction (R$ Bi)

Capex

1998 1999 2000 2001 2002

2.5 2.2 2.8

10.1

2.52001

R$ 10.1 bi 2002

R$ 2.5 bi

Wireline BusinessWireless Business

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Debt Structure – December 2001 (R$ mn)Debt Structure – December 2001 (R$ mn)

TOTAL = 8,938

LT DEBT

17%

14%

16%

17%

DEBT PROFILE

•R$ 5,382 million foreign currency (60%)*:

LIBOR +/- 7% p.a.

•R$ 3,556 million in Brazilian currency (40%):

(+/- 17% p.a.)

36%2006 and beyond

2002

2003

2004

2005

* Fully Hedged

ST 1,388

Long Term 7,549

Net Debt7,705

Cash 1,234

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Launch in 2nd Quarter;

New technology GMS/GPRS, with new services;

Synergies with TMAR (fixed wire line);

Integrated operator (fixed+mobile);

Target of 500,000 clients (market-share: ~2.5%) in the first year;

Sharing of infrastructure lower CAPEX.

PCS – Roll OutPCS – Roll Out

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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” STATEMENTSAFE HARBOR” STATEMENT

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Fax: (55 21) 3131-1325/ 3131-1326

E-mail: invest@telemar.com.br

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