3Q08 Results
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3Q08 Results. COVERAGE. MAIN CITIES. Current (79) São Paulo Rio de Janeiro Belo Horizonte Recife Brasília Manaus Curitiba Florianópolis Porto Alegre. Awaiting approval (14) Big TV (12) Guarulhos Ponta Grossa Maceió Joao Pessoa ESC 90 (2) Vitoria Vila Velha.

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3Q08 Results

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3q08 results

3Q08 Results


3q08 results

COVERAGE

MAIN CITIES

Current (79)

São Paulo

Rio de Janeiro

Belo Horizonte

Recife

Brasília

Manaus

Curitiba

Florianópolis

Porto Alegre

Awaiting

approval (14)

Big TV (12)

Guarulhos

Ponta Grossa

Maceió

Joao Pessoa

ESC 90 (2)

Vitoria

Vila Velha

The largest residential multi-service cable

company in Latin America

Pay TV leadership

Presence in the main Brazilian cities

Highest broadband growth


3q08 results

NETWORK COVERS 45% OF A AND B GROUP HOUSEHOLDS

Distribution of households by income group

Millions of urban households

7.0

44.4

9.5

16.1

2.1

1.4

1.4

1.4

4.5

2.2

3.1

7.3

2.2

2.1

18.8

6.3

2.9

2.4

2.6

11.7

3.1

3.1

11.7

1.0

0.4

0.1

Total households in NET’s area

Brasil

Net total

network

Net two-way network

A

B1

B2

C

D/E

Monthly Income

above:

US$ 2,100

US$1,200

US$400

US$300 / US$150

US$3,900


3q08 results

PENETRATION AND OPPORTUNITIES

MARKET(BRAZIL)

44.4

NET

7.0

9.5

8.9

5.8

2.9

20%

1.5

2.0

13%

31%

29%

74%

Homes

Passed -

Bidirectional

Broadband

Penetration

Pay TV Penetration

Total

Households

Total Homes

Passed

Pay TV Penetration

Voice Penetration /

Broadband penetration

Broadband

Penetration

NEW GROWTH CYCLE FAVORED BY THREE LEVERAGE FACTORS

NET’s COMPETITIVE ADVANTAGES

OVERALL SCENARIO

Growing computer sales and increasing interest in the Internet

Replacement of conventional TVs (LCD/Plasma)

Number portability

Infrastructure (HFC)

Mix of products and services (Combos)

Fully-prepared for accelerated growth

Team with expertise in Pay TV

NET brand


3q08 results

CURRENT OWNERSHIP STRUCTURE

CONTROL

Free Float

Embratel/ Telmex

Globo

ECONOMIC VALUE

Globo: 7%

Embratel/Telmex: 35%

Market: 58%

49%ON

51%ON

GB

100% ON = 113,051,524 shares

10% ON

51% ON

38% ON

1% ON

Common shares

100% PN = 225,687,596 shares

1% PN

0% PN

13% PN

86%

PN

Preferred shares

Total = 338,739,120 shares

Base date: 09/30/2008


3q08 results

CORPORATE GOVERNANCE

Accessible Management, demonstrating respect to stakeholders

Bovespa Level 2 Company, with 100% Tag along to all shareholders

Exemplary Disclosure Certificate, assuring symmetry on information release

Establishment of the Quiet Period starting15 days prior to earnings releases

Permanent Fiscal Committee, with 100% of independent members

Board of Director, with 20% of independent members


3q08 results

PAY TV

( million of subscribers)

CLIENT BASE

+ 22%

2,923

Initial Client Base

2,709

2,561

Net Additions

2,474

2,401

2,304

2,224

2,142

2,051

1,976

1,903

1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08

2006 +17%

2007 +16%

MARKET SHARE

4,743

4,961

5,161

5,349

5,512

5,799


3q08 results

BROADBAND

( million of subscribers )

CLIENT BASE

+ 60%

2,059

Initial Client Base

1,798

1,588

Net Additions

1,423

1,287

1,120

984

862

752

639

549

2006 +91%

2007 +65%

MARKET SHARE

6,040

6,417

6,951

7,751

8,278

8,925


3q08 results

VOICE

( million of subscribers)

CLIENT BASE

+ 208%

1,532

Initial Client Base

1,116

Net Additions

811

621

497

354

257

182

115

49

2007 +212%

MARKET SHARE

39,120

39,755

39,399

39,541

39,897

1%

1%

1%

2%

2%

3%

3%

3%

4%

4%

NET Fone

2%

2%

2%

2%

2%

6%

6%

6%

6%

6%

Embratel (Livre)

30%

30%

31%

30%

30%

GVT

Authorized and Mirrors

20%

20%

21%

20%

20%

Telefônica

37%

Brasil Telecom

36%

36%

35%

35%

OI

2Q07

3Q07

4Q07

1Q08

2Q08


3q08 results

CHURN RATE – LAST 12 MONTHS

PAY TV

BROADBAND


3q08 results

REVENUE GENERATING UNITS

+ 57%

2,083

2,739

3,051

7,362

3,366

3,753

4,134

4,607

5,071

5,521

6,220


3q08 results

NET REVENUES and ARPU

Net Revenues

ARPU

(R$ million)

(R$)

+ 26%

+ 6%

+ 22%

+ 29%

+ 27%

+ 8%

+ 9%

2006

2007

2006

2007

9M08

R$ 2,267

R$ 2,902

R$ 2,669


3q08 results

EBITDA

(R$ million)

+ 21%

+ 27%

+ 26%

+ 23%

2007

2006

9M08

R$ 803

R$ 639

R$ 704


3q08 results

INDEBTEDNESS

14

(R$ million)

Net Debt

Cash and cash equivalents

+ 3%

588

571

561

555

544

554

530

522

508

500

475

0.91x

0.84x

0.90x

0.83x

0.83x

0.76x

0.72x

0.69x

0.65x

0.61x

0.54x

1Q06

2Q06

3Q06

4Q06

1Q07

2Q07

3Q07

4Q07

1Q08

2Q08

3Q08

Net Debt / EBITDA

Net Debt


3q08 results

INDEBTEDNESS

(R$ million)

Amortization Schedule

Total Debt = R$ 1.6 billion

US$

43%

R$

57%

81

10

184

354

170

148

128

128

128

287


3q08 results

CAPEX

Higher net additions have increased our variable Capex

Capex

(R$ million)

89

130

110

202

168

182

186

232

172

195

260

448

356

432

Growth Capex

Net Additions

890

1,332

1,996

2006

2007

9M08


3q08 results

LIQUIDITY

Strong Cash position, ensuring financial liquidity.

There are no currency mismatches between revenues and expenses.

Low foreign exchange exposure (perpetual bonds, Inbursa and equipments)

Hedges used as a protection mechanism and not for speculative purposes

Product prices not pressured by the global scenario

Operating cash flow is sufficient to defray investments and financial expenses


3q08 results

Disclaimer

This release contains forward-looking statements relating to the prospects of the business, estimates for operating and financial results, and those related to growth prospects of the Company. These are merely projections and, as such, are based exclusively on the expectations of the Company’s management concerning the future of the business and its continued access to capital to fund its business plan. Such forward-looking statements depend, substantially, on changes in market conditions, government regulations, competitive pressures, the performance of the Brazilian economy and the industry, among other factors and risks disclosed in the Company’s filed disclosure documents and are, therefore, subject to change without prior notice.

Investor Relations

Phone. (+55 11) [email protected]://ir.netservicos.com.br


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