VIVO, THE LARGEST WIRELESS COMMUNICATION GROUP IN SOUTH AMERICA, REPORTS SECOND QUARTER 2003 RESULTS OF TELE CENTRO OESTE CELULAR PARTICIPAÇÕES S.A.

The evaluation method for certain performance indicators has been changed to be compatible with the criteria used by other Vivo operators. Historical information was adjusted accordingly for comparison purposes:
- Churn: will now be calculated as (disconnections / average number of clients in the period). Previously, churn rate was equal to (disconnections / (average number of clients in the beginning of the quarter + gross additions in the quarter)).
- ARPU: adjusted based on the reclassification of FUST and Funttel taxes from the revenue line to operating expenses.
- SAC: marketing expenses percentage has been lowered from 100% to 70% and no longer includes Fistel tax as previously.

In 2Q02, Gross Operating Revenues, Net Operating Revenues and Totaled Cost of Services, R$ 482.5 million, R$ 386.4 million and R$ 69.3 million, respectively (Press Release table 1), do not match the ITR income statement (table 01.01), due to accounting reclassifications.

For comparison purposes the historical information regarding Net Operating Revenue, Operating Expenses and EBITDA margin were adjusted due to the reclassification of FUST and Funttel taxes from deductions of revenues to operating expenses.

Employee profit sharing is now accounted for as an operating expense, which was also reflected in the 2Q02 figures for comparison purposes.

The joint venture between Telefónica Móviles and Portugal Telecom unified the operations of Tele Centro Oeste Celular Participações S.A. with those of Telesp Celular Participações S.A., Tele Sudeste Celular Participações S.A., Celular CRT Participações S.A. and Tele Leste Celular Participações S.A. as of April 14, 2003 under the “Vivo” brand.

• TCO has continuously generated positive net income, as evidenced by prudent management of shareholder resources.

• NBT registered net profit of R$12.1 million in the second quarter 2003.

• Intense commercial activity and strong promotional Mothers Day and Valentines Day campaigns caused TCO’s total client base to increase 23.3% compared to 2Q02.

• Vivo has been concentrating on the implementation of a CDMA network (1xRTT), selective overlay of the TDMA coverage maintained by TCO, stabilization of capability and coverage of TDMA network, and development of new telecommunications services.

• “Vivo” has encouraged its operators to adopt commercially aggressive store lay-outs and service plans, as well as unifying the communication of its corporate websites, among other initiatives aimed at capturing synergies.

• TCO has achieved systematic client base growth in its area of operations, specifically in the central west and north of Brazil plus the state of Maranhão at a pace that surpasses the national average.

• In 2Q03, TCO’s net additions represented 8.8% of net additions in Brazil as registered by the Brazilian Telecommunications Agency (ANATEL)

• Retention and loyalty campaigns have contributed to the maintenance of TCO’s leadership in this new competitive environment, in particular due to the coverage and quality of service relative to the competition.

• TCO, in the second quarter of 2003, expanded its coverage, being present, cumulatively, in 540 municipalities and locations. At the end of 2Q03, TCO provided service to 366 municipalities and locations in its Area 7 operation, and 174 municipalities and locations in Area 8.

Blended ARPU (average net revenue per user) in Area 7 has grown consistently, while ARPU in Area 8 has been stable, reflecting the respective economies in each region that have shown continuous GDP per capita growth mainly due to expansion of the agricultural sector in the central west and mining and exploration in the north of Brazil.

The Company believes that wireless communication services still have plenty of room to grow, considering the advantage of mobility and new added services offered. The estimated wireless penetration rate in TCO’s areas of operation reached 25.4 per 100 residents in Area 7, where 3 wireless carriers operate, and 12.1 per 100 residents in Area 8, where 4 wireless carriers operate.

TCO has been efficient in its operations as measured by the clients per employee indicator that has increased each quarter.

TCO’s Net Operating Revenue from Services grew 12.1% when compared to 1Q03 and 29.3% when compared to 2Q02. This performance is due to client base expansion and to increased revenue from interconnection, since the tariff readjustment in February 2003 had a full impact on 2Q03 -and only a partial impact in 1Q03.

Net Operating Revenue from Sales of Merchandise increased 80.7% in relation to 1Q03, a result of a higher sales volume in 2Q03 primarily following promotional Mother’s Day and Valentine’s Day campaigns and of the higher sales price of handsets due to a strategic repositioning that reduced subsidies.

Cost of goods sold increased 53.1% when compared to 1Q03, growing less than revenue from sales of handsets (80.7%), as a result of a higher sales volume in 2Q03 primarily following Mother’s Day and Valentine’s Day campaigns. SAC decreased 16.4% in relation to 1Q03.

The 14.0% increase in sales expenses compared to 1Q03 is a result of higher marketing expenses due to the launch of the Vivo brand (non-recurring expenses) and of increased payment of sales commissions, linked to the higher sales volume in the quarter.

Past due accounts represented 2.4% of gross revenues, flat when compared to the second quarter of 2002, due to the efforts to improve the postpaid client base and also to tighter credit control policies for dealers and corporate clients.

Strong EBITDA performance confirms the effective implementation of TCO’s strategic initiatives. Excluding the effect of handset sales, EBITDA in the second quarter of 2003 was R$ 222.6 million with an EBITDA margin of 52.9%, attractive when considering the increase in regional competition.

Depreciation and amortization amounted to R$ 48.9 million in the quarter. Depreciation is calculated based on the linear basis method, considering the useful life of assets.

*Exchange variation on foreign currency debt that includes the Brazilian Development Bank (BNDES) operation that is linked to a basket of currencies. – UMBNDES.

TCO’s net financial results mainly reflect the rise of the Real exchange rate against the US dollar. On June 30, 2003, TCO held an amount of US$ 93.5 million in exchange rate derivatives to hedge its foreign exchange denominated obligations. The effect of the Real appreciation on the derivatives also increase taxes on financial revenues.

On June 30, 2003, TCO had total debt of R$ 519.1 million (R$ 608.0 million on March 31, 2003) of which 62.5% was denominated in foreign currency (59.15% denominated in US Dollars and 3.4% indexed to a currency basket - an index used by the BNDES – Brazilian Development Bank). Derivative instruments hedged 87.1% of the debt denominated in US Dollars at the end of the quarter. Derivative instruments covered 82.4% of foreign currency debt. TCO held cash (R$ 53.2 million), financial investments (R$ 669.7 million), marketable securities (R$ 223.5 million), and assets and liabilities from derivative operations (R$ 14.4 million payable), resulting in a net cash position of R$ 412.9 million, characterizing a solid financial position.

In the year to date, R$ 70.0 million was invested mainly in projects to expand the capacity of our services, to provide new services and to develop proprietary transmission routes.

• Best Brazilian Communication Company – InfoExame Magazine,

• Best Brazilian Telecommunication Company –Forbes Brazil Magazine,

• Best Brazilian Company in Social Responsibility Category – InfoExame Magazine,

• Wireless service operator of the year – Telecom Yearbook,

• TOP 10 – iBEST.

On April 10, 2003 Brazilian Telecommunications Agency – ANATEL- approved the transfer of interest ownership, owned by BID S.A., in the Capital Stock of Tele Centro Oeste Celular Participações S.A. to Telesp Celular Participações S.A.; On April 25, 2003, Tele Centro Oeste Celular Participações S.A. was informed by its controlling shareholder that the closing of the operation of exchange of controlling interest from the Company to Telesp Celular Participações S.A., according to the terms of the Preliminary Purchase and Sale Agreement of Shares and Purchase and Sale Agreement of Shares. The operation and the purchase by Telesp Celular Participações S.A. of shares representing a controlling interest in the Company have now been completed.

On July 6, 2003, the wireless operators implemented the Carriers Selection Code on national (VC2 and VC3) and international long distance calls, according to SMP rules. “Vivo’s operators no longer receive VC2 and VC3 revenues instead they receive interconnection revenues for the usage of their networks on such calls.

Fabiola Michalski – Investor Relations
fmichalski@vivo.com.br
(55 11) 3059 7975