TELECOMUNICAÇÕES DE SÃO PAULO S/A – TELESP
ANNUAL RESULTS – 2009
Earnings Release – 2009
Telecomunicações de São Paulo S/A – TELESP
São Paulo, February 11, 2010
INDEX
BOARD OF DIRECTORS’ MESSAGE 1
HIGHLIGHTS 2
OPERATING REVENUES 4
OPERATING EXPENSES 6
FINANCIAL DATA 8
ADDITIONAL NOTES 11
CAPITAL MARKET 13
DIVIDENDS AND INTEREST ON OWN CAPITAL 14
INCOME STATEMENT 15
BALANCE SHEET 16
STATEMENT OF CASH FLOW 17
OPERATING DATA 18
TARIFFS 19
SHAREHOLDING STRUCTURE AND CAPITAL STRUCTURE COMPOSITION 20
_________________________________________________________________________________________________
PRICES ON FEBRUARY 11, 2010 INVESTOR RELATIONS CONTACTS
ON – TLPP3 – R$ 36.50 Norair Ferreira do Carmo
PN – TLPP4 – R$ 40.60 Maria Tereza Ali Pelicano David
ADR – TSP – US$ 22.12 Carolina Fernandes Pontes Mada
Market Cap – R$ 19,861.1 million Cristina Marini Teles
Luciana Nóri de Souza
(55 11) 3549-7200
www.telefonica.com.br
Earnings Release – 2009
Telecomunicações de São Paulo S/A – TELESP
São Paulo, February 11, 2010
1
Sao Paulo, February 11, 2010 – Telecomunicações de São Paulo S/A – TELESP (BM&FBOVESPA: TLPP3 and
TLPP4, NYSE: TSP), releases today its consolidated results of 2009. The following information is presented in
accordance with the accounting principles usually accepted in Brazil (BR GAAP), and presents reclassifications
in 2008 due to changes on accounting practices introduced by Law# 11,638/07 and # 11,941/09. In accordance
to the BR GAAP criteria, are consolidated the following controlled and wholly owned subsidiaries companies: A.
Telecom S.A., Telefônica Data S.A., Telefônica Sistema de Televisão S.A., Aliança Atlântica Holding B.V.,
Companhia AIX de Participações and Companhia ACT de Participações.
BOARD OF DIRECTORS’ MESSAGE
The year of 2009 was full of challenges and achievements for Telesp. The Company, believing in the fast
recover of the economic activity and in the need of modernization and higher capacity of its network, serving
nearly 15 million customers in Sao Paulo state, held the forecasted investments for the year, having as a
priority the improvement of quality and services provided.
Among the services provided, Speedy peaked at 2.6 million customers in the year. The moderate annual
growth of this service is explained by the sales interruption in June 2009, by Anatel´s determination, due to
instability events observed in the service rendered, being the sales returned in August 2009, after Anatel´s
authorization and the deployment of the stabilization plan.
Intensifying its quality compromise, it was created the plan “Telefônica em Ação”
(http://www.telefonicaemacao.com.br), basically structured in two parts: expansion and stabilization of the
network, involving improvements in the IP network, DNS and toll-gate, and in the reformulation of operational
and commercial practices.
An example of this change in the commercialization model is the audit process over 100% of Speedy sales,
whereby was reduced in 50% the total calls for the Costumer Attention Central in comparison with the
beginning of the year, due to a higher capacity to solve issues presented in the first call, ensuring greater
agility, efficiency and comfort to the clients.
The improvement of services, processes and other actions implemented have ensured a higher rate of
customer satisfaction, which can be gauged by the significant reduction in the number of customers who rely
on external entities to address issues related to the Company. In December 2009, we have recorded a
reduction in comparison with the beginning of the year, of 68% with PROCON-SP and of 54% with Anatel.
Besides of that, we highlight in the 4Q09 the significant improvement of the churn rate both of broadband and
lines in service. These are important examples of the obtained results as of the mentioned transformation.
2010 promises to be a year with a more promising economy, with a significant growth potential, in which
Telesp will keep its investments, its commitment to improve the quality of services and improve even more the
customer satisfaction, with the certainty of being in the right direction that will permit the Company to
achieve its goal of being the preferred choice of consumers for communication, information and
entertainment services.
This goal is reflected both in the development of innovative services for a more sophisticated market and in
attending the wide range of consumers who recently have joined the technology world and eager to expand
their experiences therein.
Earnings Release – 2009
Telecomunicações de São Paulo S/A – TELESP
São Paulo, February 11, 2010
2
FINANCIAL HIGHLIGHTS
Unaudited consolidated figures (Reais Million) 2009 2008 % var 4Q09 4Q08 % var
Gross Operating Revenues 23,155.8 23,020.8 0.6 5,721.9 5,956.3 (3.9)
Deductions (7,360.0) (7,041.8) 4.5 (1,730.8) (1,832.0) (5.5)
Net Operating Revenues 15,795.8 15,979.0 (1.1) 3,991.1 4,124.3 (3.2)
Operating Expenses (9,919.0) (9,423.6) 5.3 (2,595.7) (2,418.7) 7.3
EBITDA 5,876.8 6,555.4 (10.4) 1,395.4 1,705.6 (18.2)
EBITDA Margin (%) 37.2% 41.0% (3.8) p.p. 35.0% 41.4% (6.4) p.p.
Financial Result (194.6) (227.5) (14.5) (51.2) (43.5) 17.8
Net Income 2,173.0 2,419.4 (10.2) 544.8 723.7 (24.7)
Capex 2,221.0 2,342.5 (5.2) 817.4 861.6 (5.1)
Capex / Net Operating Revenues 14.1% 14.7% (0.6) p.p. 20.5% 20.9% (0.4) p.p.
The Net Operating Revenues in 2009 was R$15,795.8 million, presenting a decrease of 1.1% when compared to
the R$15,979.0 million registered in 2008. The main reductions were in local service, fixed-to-mobile and
monthly fee revenues, partially offset by the increase of broadband, pay TV and infrastructure rental revenues.
The EBITDA in 2009 was R$5,876.8 million, a 10.4% decrease when compared to the R$6,555.4 million in 2008.
The EBITDA Margin reached in 2009 was 37.2%, a 3.8 p.p. decrease when compared to 2008. This variation
mainly reflects the decrease of traditional fixed line revenue and the expenses increase of customer attention
with quality improvement of services by the reformulation of operational and commercial practices, aiming a
higher satisfaction of our clients.
The consolidated Capex in 2009 was of R$2,221.0 million, presenting a 5.2% decrease when compared to 2008.
This variation is directly related to the Real appreciation in the period and to the suspension of Speedy service
sales. As a percentage over net operating revenues, the ratio was of 14.1% in 2009, almost in line with the ratio
registered in 2008.
INVE S TME NT E VOLUTION
(R $ Million)
386
508587
862
405498 500
817
1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09
Traditional Bus ines s / Maintenance New S ervices / Broadband
Earnings Release – 2009
Telecomunicações de São Paulo S/A – TELESP
São Paulo, February 11, 2010
3
OPERATING HIGHLIGHTS
Lines in Service – the new operational model of Telesp, implemented in the second semester of 2009, already
reflects improvements in services and in customer’s satisfaction. Results of that can be already observed,
between which we can highlight the deceleration of lines in services reduction, registering a loss of only
94,160 accesses during the 4Q09, 52.6% lower than in the 4Q08 and when comparing with the 3Q09, it is
observed a reduction of 22.9%.
Broadband - offered under the brands “Speedy” and “Ajato”, reached 2,636,344 clients in 2009, a net addition
of 81 thousand customers in relation to 2008. When compared to the 3Q09, it was registered 58 thousand net
additions. The moderate developments of this service were due to the interruption of sales in June, 2009 by
Anatel´s decision. After practically two months, the sales of this service had gradually returned after the
deployment of the stabilization plan, intensifying the Company's commitment to quality through the network
stabilization and expansion and the reformulation of operational and commercial practices. The improvement
of services, processes and other actions implemented have guaranteed a significant churn reduction of this
service.
2,555 2,578 2,636
4Q08 3Q09 4Q09
(Thousands)
BROADBAND CLIENTES EVOLUTION
3.2%
2.3%
Pay TV – offered in bundles or stand-alone, it is available through DTH (Direct to the Home) and MMDS
(Multichannel Multipoint Distribution Service). Telesp keeps offering its services with quality focused on
specific segments of customer. In the second semester of the year, as consequence of the negative impact in
duos and trios sales due to the suspension of Speedy service sales, it was registered a lower level of commercial
activity. Thus, the Company reached 486,614 clients in 2009, an increase of 3.0% when compared to 2008.
Earnings Release – 2009
Telecomunicações de São Paulo S/A – TELESP
São Paulo, February 11, 2010
4
OPERATING REVENUES
The gross operating revenue in 2009 reached R$23,155.8 million, an increase of 0.6% when compared to the
R$23,020.8 in 2008.
Gross Operating Revenues Evolution
Unaudited consolidated figures (Reais Million) 2009 2008 % var 4Q09 4Q08 % var
Gross Operating Revenues 23,155.8 23,020.8 0.6 5,721.9 5,956.3 (3.9)
Monthly subscription fee 5,226.2 5,312.9 (1.6) 1,299.5 1,349.0 (3.7)
Installation charge 108.8 114.3 (4.8) 29.7 20.1 47.3
Local service 2,416.9 2,736.8 (11.7) 585.9 655.7 (10.7)
DLD 3,870.9 3,808.8 1.6 988.5 1,003.6 (1.5)
Fixed-to-mobile 4,101.9 4,372.0 (6.2) 993.2 1,115.2 (10.9)
ILD 112.6 140.4 (19.8) 25.7 31.2 (17.4)
Interconnection 487.8 465.8 4.7 141.5 116.0 22.0
Public telephony 386.6 444.9 (13.1) 74.5 105.0 (29.1)
Data transmission 4,176.0 3,759.5 11.1 997.4 1,025.1 (2.7)
Infrastructure Rental 509.3 384.3 32.5 139.8 98.6 41.8
Pay TV 600.3 379.0 58.4 151.7 134.6 12.7
Others 1,158.6 1,102.1 5.1 294.4 302.2 (2.6)
The changes are explained as follows:
Monthly Subscription Fee: reached R$5,226.2 million in 2009, a decrease of 1.6% when compared to the
R$5,312.9 million in 2008. This drop is mainly related to the decrease of average lines in service and to the
increase of the alternative plan base of fixed line that have lower monthly subscription fee. On the other hand,
it was registered a revenue increase in the corporate segment and a tariff readjustment of 0.98% as of
September, 2009.
Installation Fee: decreased 4.8% from R$114.3 million in 2008 to R$108.8 million in 2009.This variation is
mainly justified by lower new accesses presented in the period. When compared 4Q09 x 4Q08, it was
registered an increase of 47.3%, from R$20.1 million to R$29.7 million, due to the success of commercial effort
focused on alternative plans and to the tariff readjustment of 0.98% as of September, 2009.
Local Service: totaled R$2,416.9 million in 2009, a decrease of 11.7% when compared to the R$2,736.8 million
in 2008. This variation is directly related to the lines in service decrease and to the sales increase of duos and
trios bundles which offer flat fee with local unlimited calls aiming customer loyalty, resulting in an increase of
the registered traffic, but with a reduction of the exceeding traffic. Furthermore, local service revenues were
negatively impacted by the demand decrease of 0300 service for promotional campaigns. These drops were
partially offset by the increase of exceeding traffic of alternative plans and by the tariff readjustment of 0.98%
as of September, 2009.
DLD: in 2009 totaled R$3,870.9 million, an increase of 1.6% when compared to the R$3,808.8 million in 2008.
This effect is explained by an increase of SME traffic with the “15” use (selection code of the operator) and by a
positive impact of the tariff readjustment of 0.98% as of September, 2009, been partially offset by a decrease
of fixed outgoing traffic. When compared 4Q09 x 4Q08, it was registered a decrease of 1.5% by a reduction of
fixed outgoing traffic in the period.
Fixed-to-mobile revenues: dropped from R$4,372.0 million in 2008 to R$4,101.9 million in 2009, a decrease of
6.2%, due to the reduction of VC1, VC2 and VC3 traffic in the period.
ILD: reached R$112.6 million in the 2009, a decrease of 19.8% when compared to the R$140.4 million in 2008.
This effect is mainly explained by a decrease of fixed outgoing traffic.
Earnings Release – 2009
Telecomunicações de São Paulo S/A – TELESP
São Paulo, February 11, 2010
5
Interconnection revenues: increased 4.7% from R$465.8 million in 2008 to R$487.8 million in 2009, explained
by a higher mobile ingoing traffic and by the tariff readjustment of 0.98% as of September, 2009.
Public Telephony: in 2009 was R$386.6 million, a decrease of 13.1% when compared to the R$444.9 million in
2008. This variation is registered mainly due to a higher competition in the mobile market, been partially offset
by the tariff readjustment of 0.98% as of September, 2009.
Data Transmission: increased of 11.1% from R$3,759.5 million in 2008, to R$4,176.0 million in 2009, justified
by a rise of broadband service revenues in the residential and corporate segments. When compared 4Q09 x
4Q08, it was presented a decrease of 2.7%, explained by the gradual reestablishment of the Speedy service
sales after the suspension of this service commercialization, in accordance to Anatel’s decision. It’s important
to highlight that the Company intensified its commitment with quality through the reformulation of
operational and commercial practices, which have guaranteed best rates of customer’s satisfaction, as already
reflected in a significant churn reduction of this service.
Infrastructure rental: increased 32.5% from R$384.3 million in 2008 to R$509.3 million in 2009. This effect is
mainly explained by the higher volume of rented circuits, due to the growth of the telecommunication market
and to the demand for a higher volume of band for data transmission.
Pay TV: this service reached R$600.3 million in 2009, a positive evolution of 58.4% when compared to the
R$379.0 million in 2008. The Company registered a base of 486,614 clients in 2009, including TV services
through DTH and MMDS.
Others: increased 5.1% from R$1,102.1 million in 2008 to R$1,158.6 million in 2009. This effect is chiefly
explained by a higher supply of integrated solutions for the corporate segment, been partially offset by the
revenues decrease of value added services.
Earnings Release – 2009
Telecomunicações de São Paulo S/A – TELESP
São Paulo, February 11, 2010
6
OPERATING EXPENSES
Operating expenses in 2009 reached R$9,919.0 million, an increase of 5.3% when compared to the R$9,423.6
million in the same period of the previous year.
Operating Expenses Evolution
Unaudited consolidated figures (Reais Million) 2009 2008 % var 4Q09 4Q08 % var
Operating Expenses (9,919.0) (9,423.6) 5.3 (2,595.7) (2,418.7) 7.3
Personnel expenses (700.7) (748.8) (6.4) (159.3) (179.1) (11.1)
Supplies (232.7) (222.7) 4.5 (82.8) (67.1) 23.4
Outsourcing expenses (3,852.6) (3,344.4) 15.2 (1,072.2) (916.1) 17.0
Interconnection expenses (3,803.0) (3,855.3) (1.4) (904.3) (1,009.6) (10.4)
Rental expenses (568.7) (492.2) 15.6 (158.5) (128.5) 23.3
Taxes (433.1) (444.5) (2.6) (106.2) (100.4) 5.8
Bad Debt provision (564.6) (538.6) 4.8 (121.0) (142.9) (15.4)
Investment gains (losses) 18.8 8.3 n.a. 5.9 2.3 n.a.
Other operating revenues (expenses) 217.6 214.6 1.4 2.6 123.0 (97.8)
The variations are explained by the following items:
Personnel expenses: reached R$700.7 million in 2009, a decrease of 6.4% when compared to the R$748.8
million in 2008. This variation is explained by organizational restructuring programs occurred in 2008 which
increase the comparison base.
Supplies: increased from R$222.7 million in 2008 to R$232.7 million in 2009, a rise of 4.5%. This variation is
mainly explained by a higher supply of integrated solutions for the corporate segment, been partially offset by
the cost decrease of equipments related to the PDTI.
Outsourcing expenses: reached R$3,852.6 million in 2009, an increase of 15.2% when compared to the
R$3,344.4 million in 2008. This variation is mainly related to the expenses increase of customer service, due to
the reformulation of commercial practices realized by the Company, to the network maintenance and to the
purchase of TV content.
Interconnection expenses: in 2009 totaled R$3,803.0 million, a decrease of 1.4% when compared to the
R$3,855.3 million in 2008. This effect is mainly explained by the decrease of VC1, VC2 and VC3 traffic in the
period.
Rental expenses: increased from R$492.2 million in 2008 to R$568.7 million in 2009, a rise of 15.6% mainly due
to the increase of network rental expenses and infrastructure for last-mile traffic termination.
Taxes: reached R$433.1 million in 2009, a decrease of 2.6% when compared to the R$444.5 million in 2008.
This effect is explained by the reduction of FUST and FUVEST contribution and the differential rate of ICMS in
the purchase of use and consumption materials. When compared 4Q09 x 4Q08, it was registered an increase
of 5.8% due to changes on the FUST calculation base which impacted the 4Q08.
Bad Debt Provisions: increased 4.8% from R$538.6 million in 2008 to R$564.6 million in 2009. As a percentage
of the net operating revenues, the ratio was of 3.4% to 3.6%, respectively. When comparing 4Q09x 4Q08, this
percentage improves from 3.5% to 3.0%.
Investment gains (losses): in 2009 recorded a positive result of R$18.8 million, compared to a positive result of
R$8.3 million in 2008. This variation is justified by the effect of equity accounting of shareholding on Cable TV
operators.
Earnings Release – 2009
Telecomunicações de São Paulo S/A – TELESP
São Paulo, February 11, 2010
7
Other operating revenues (expenses): totaled R$217.6 million in 2009, an increase of 1.4% when compared to
2008. This effect is mainly justified by the recalculation of labor and civil contingencies value concentrated in
the 2Q09, been partially offset by a higher contingency provision with the regulator and pension plan. When
compared 4Q09 x 4Q08, it was registered a negative variation of R$120.3 million, mainly explained by a higher
provision of labor contingencies, with the regulator and pension plan.
Depreciation: dropped from R$2,755.3 million in 2008 to R$2,505.5 million in 2009, a decrease of 9.7%. This
effect is mainly explained by an increase of assets fully depreciated and by the decrease of goodwill
amortization that as of 2009 isn’t registered anymore, in accordance to new accounting practices, besides the
decrease of modem obsolescence provision.
Earnings Release – 2009
Telecomunicações de São Paulo S/A – TELESP
São Paulo, February 11, 2010
8
FINANCIAL DATA
Financial Investments: the Company invests the excess cash and cash equivalents of R$2,266.9 million, mainly
in financial investments (Certificados de Depósitos Bancários) in short-term, based on the variation of the CDI,
reducing the exposure of the domestic interest rate (CDI) over its net debt. The Company diversifies its
exposure investing in different first line financial institutions, in accordance to the credit limits and
diversification set on the Company’s current credit risk policy.
Loans, Financing and Debentures: on December 31, 2009, the Company had a liability of R$3,520.0 million,
from which R$23.0 million were loans denominated in foreign currency raised at fixed interest rates (with
swap for %CDI rate), R$1,510.8 million in debentures paying interests based on the variation of the CDI rate +
fixed spread of 0.35% (also with swap for %CDI rate) and the amount of R$1,986.2 million in loans with Banco
Nacional de Desenvolvimento Econômico e Social (BNDES).
Debentures: on September 03, 2004, Telesp announced a Public Offering of Securities and the activation,
within the Program’s parameters, of the first issuance of Telesp’s debentures. The offer consisted of the
issuance of 150 thousand not convertible debentures, of unsecured type, with face value of R$10 thousand per
unit, totaling the amount of R$1.5 billion, in single tranche. The debentures conditions were renegotiated on
September 01, 2007, end date of the first validity remuneration period, and the second period also began in
that date with closing foreseen to September 01, 2010, the debentures’ maturity date. The debenture bears
interest on a quarterly basis payment, of the accumulated average rates of the Interbank Interest rate of one
day (DI rate), capitalized by a spread of 0.35% per year, calculated and disclosed by the Câmara de Custódia e
Liquidação – CETIP, since the renegotiation date.
BNDES: on October 10, 2007, BNDES approved a credit up to R$2,034.7 millions for Telesp to realize
investments in products and services that are produced domestically, from which R$1,959.5 million have
already been drawn and the respective investments are approved and accepted by BNDES. In November, 2009
it was released a tranche, in the amount of R$60 million at the cost of TJLP + 3.73% per year and, in December,
2009 it was released a tranche of R$68.6 million at the cost of TJLP + 1.73% per year for investments that
contain, simultaneously, national technology and production. These amounts were invested on network
modernization and expansion of voice, data and video services.
LOANS AND FINANCING(in thousand of reais)
Consolidated Currency Annual Interest
Rate Due Date Short-term Long-term Total
Loans in local currency
BNDES Loan UR TJLP TJLP + 3.73% Until 2015 243,120 1,674,401 1,917,521
BNDES Loan UR TJLP TJLP + 1.73% Until 2015 8,032 60,596 68,628
Debentures R$ CDI + 0.35% Sep 2010 1,510,806 0 1,510,806
Loans in foreign currency
Mediocrédito US$ 1.75% Until 2014 5,601 17,405 23,006
Total 1,767,559 1,752,402 3,519,961
December '09
Earnings Release – 2009
Telecomunicações de São Paulo S/A – TELESP
São Paulo, February 11, 2010
9
CONSOLIDATED SCHEDULE OF LONG-TERM OBLIGATIONS(in thousand of reais)
Year Amount
2011 398,194
2012 397,898
2013 397,570
2014 395,061
A partir de 2015 163,679
Total 1,752,402
December '09
NET FINANCIAL DEBT
(in million of Reais)
December '09 September '09 December '08
Short-term Debt (1,767.6) (1,657.8) (518.8)
Long-term Debt (1,752.4) (1,730.8) (3,217.4)
Total Debt (3,520.0) (3,388.7) (3,736.2)
Net Derivatives Position (31.1) (29.5) 58.4
Debt (post-Derivative Operations) (3,551.1) (3,418.1) (3,677.8)
Cash and Cash Equivalents 2,277.0 1,547.7 1,741.0
Net Debt (1,274.0) (1,870.4) (1,936.8)
Net Debt / EBITDA (*) 0.22 0.30 0.30
Total Debt / EBITDA (*) 0.60 0.55 0.57
Total Debt / Market Cap 0.17 0.16 0.17
(*) The ratio was calculated over the EBITDA composed by the sum of the four previous quarters.
Derivatives: all Company’s financial derivative contracts aim the protection of exchange risk and fluctuations
of interest rates related to financial debt, in accordance to the corporate policy of risk management. Following
this, variations on risk factors result in an inverse effect intended to protection. Therefore, the Company
doesn’t have financial derivative instruments to speculation propose and the exchange financial equities are
hedged.
On December 31, 2009, for protection of currency variations risk propose, 100% of the Company’s financial
debt denominated in foreign currency was covered by asset positions of exchange hedge x “CDI” with fair
value of R$23.0 million, equivalent to the fair value of this debt. On the same date, the Company had swap
operations – CDI + spread x %CDI, with asset position of R$1,514.2 million and flows similar to the debentures’,
to cover the risk of its fixed rate spread, with debentures (without premium) fair value of R$1,514.2 million. On
December 31, 2009, the Company didn’t have anymore swap CDI x fixed rate contracts to partially cover the
variation of domestic interest rates related to the liability position of derivatives exposed to CDI.
For the period ended on December 31, 2009, the derivative operations generated a negative net consolidated
result of R$58.0 million, while the currency operations generated a negative net consolidated result of R$59.6
million, the operations to cover the debentures fixed spread generated a positive result of R$1.7 million and
the swap operations CDI x fixed rate generated a negative net consolidated result of R$55 thousand.
On December 30, 2009 it was recognized a balance of R$575 thousand as asset and a balance of R$31.7 million
as liability to reflect the derivatives position on the mentioned date.
Earnings Release – 2009
Telecomunicações de São Paulo S/A – TELESP
São Paulo, February 11, 2010
10
DERIVATIVES POSITION(in Reais thousand)
Swap Contracts Fair Value
Assets
Foreign Currency 23,009.8
Variable Rate (CDI) + Spread 1,514,243.5
Liabilities
Variable Rate (CDI) (54,680.9)
Variable Rate (CDI) (1,513,668.8)
Asset balance 574.7
Liabilities balance (31,671.1)
December '09
NET EXPOSURE(in Reais thousand)
Operation Risk Exposure
Hedge (Long Position) Derivatives (risk of USD decrease) 23,009.8
USD-denominated debt Debts (risk of USD increase) (23,006.5)
Net Exposure 3.2
Hedge (Long Position) Derivatives (risk of CDI decrease) 1,514,243.5
Debentures (CDI) Debentures (risk of CDI increase) (1,514,243.5)
Net Exposure 0.0
Hedge (Short Position CDI)
Derivatives (risk of CDI increase) (1,568,349.6)
Hedge (Long Position CDI)
Derivatives (risk of CDI decrease) 0.0
Net Exposure (1,568,348.6)
3.2
(1,568,348.6)
Net exposure on USD variation
Net exposure on CDI variation
December '09
The CDI net exposure (R$1,568.3 million) doesn’t reflect the total exposure to domestic interest rate, once the
Company has, as a “natural hedge”, short term financial investments based on CDI variation (R$2,266.9 million
on December 31, 2009).
Financial Result: in 2009 reached -R$194.6 million, improving R$33.2 million or 14.6% when compared to 2008,
mainly due to higher revenues with financial investments and to lower net debt.
Earnings Release – 2009
Telecomunicações de São Paulo S/A – TELESP
São Paulo, February 11, 2010
11
ADDITIONAL NOTES
1) Recent Corporate Events
a) Corporate Restructuring involving A. Telecom S.A. – On December 30, 2009, Telesp´s 30th Extraordinary
General´s Meeting approved the A. Telecom spun-off part and subsequent merger of spun-off part by Telesp.
This transaction included the transfer of fixed assets and intangible rights related to a parcel of A. Telecom
costumer’s base. The spun-off part merged by Telesp was in the amount of R$99 million. The mentioned merger
didn´t increase the capital stock of Telesp.
b) Voluntary Public Tender Offer: On October 7, 2009, Telesp’s Board of Directors approved the launching of a
voluntary public tender offer for the acquisition of up to 100% of the shares issued by GVT (Holding) S.A. for
the price of R$ 48.00 per share to be paid in cash. On November 4, 2009, Telesp increased the offer price to
R$50.50 per share, aiming the confirmation of the success of the voluntary public tender offer execution. The
transaction would represent a total investment of R$ 6.9 billion, considering the acquisition of total amount of
fully diluted shares. However, in the date of tender offer, on November 19, 2009, Telesp announced to the
market, after had been informed by BM&F, BOVESPA that the conditions on the tender offer for the acquisition
of the shares of the Brazilian company GVT (Holding) S.A. that related to the minimum number of shares have
not been met. As a result, the tender offer took no effect.
c) Corporate Restructuring involving Telefônica Data do Brasil Participações Ltda. – DABR and Telefônica
Televisão Participações S.A. – TTP - In accordance to the relevant fact published on October 21, 2008, the
Company’s Board of Directors approved, on that date, the propose of corporate reorganization involving DABR
and TTP (wholly-owned subsidiary of Telesp, which had stakes on Telefônica Sistema de Televisão S.A., A.
Telecom S.A. and Telefônica Data S.A’s capital).
On November 11, 2008, the propose of merger of DABR and TTP by Telesp was approved by the Company’s
shareholders on its Extraordinary Shareholders’ meeting. As a result of the merger of TTP, Telefônica Sistema
de Televisão S.A., A. Telecom and Telefônica Data companies became wholly-owned subsidiaries of Telesp.
d) Increase on Telefônica Televisão Participações S.A.’s Equity (previously named Navytree Participações S.A.) –
On July 25, 2008, the Company increased the Telefônica Televisão’s capital with stocks of Telefônica Data S.A.’s
equity. As a result, T. Data became a wholly-owned subsidiary of Telefônica Televisão.
2) TARIFFS READJUSTMENT OCCURRED IN 2009 AND 2008
a) Fixed-to-Fixed Tariff – On September 11, 2009, through Edicts# 5,179 and 5,180, Agência Nacional de
Telecomunicações - Anatel approved the tariff readjustment of the Serviço Telefônico Fixo Comutado - STFC,
according to the criteria established in the Concession Contracts for Local and Domestic Long Distance
Services, effective as of September 16, 2009. The tariff readjustments were 0.98%.
b) Fixed-to-Fixed Tariff – On July 21, 2008, through Edicts# 4,288 and 4,289, Anatel approved the tariff
readjustment of the Serviço Telefônico Fixo Comutado - STFC, according to the criteria established in the
Concession Contracts for Local and Domestic Long Distance Services, effective as of July 24, 2008. The tariff
readjustments were 3.01%.
c) Fixed-to-Mobile Tariff – On July 21, 2008, through Edict# 4,290, Anatel approved the 3.01% tariff
readjustment for the fixed-to-mobile calls (VC1, VC2 and VC3) throughout the entire concession area of Telesp,
sectors 31, 32 and 34 of Region III. On the same date, was also approved the readjustment of fixed-to-mobile
interconnection rate (VUM) related to the VC1, VC2 and VC3 in 2.06%. The readjustments were effective as of
July 24, 2008.
Earnings Release – 2009
Telecomunicações de São Paulo S/A – TELESP
São Paulo, February 11, 2010
12
3) CHANGES ON THE ADOPTED ACCOUNTING PRACTICES
The Company decided to adopt as of 2008 the changes on accounting practices introduced by the Law#
11,638/07 and Law# 11,941/09, due to several accounting pronouncements issued by Comitê de
Pronunciamentos Contábeis (CPC) and deliberated by CVM. As a result, the comparative information in the first
quarter of 2009 already presents these practices, among which are highlighted:
a) Financial Leasing: PDTI contracts are accounted with financial leasing characteristics;
b) Financial Instruments: financial assets and liabilities initially evaluated by fair value;
c) Present Value Adjustment: certain long term assets and liabilities initially accounted by its discounted
present value;
d) Accumulated Translation Adjustment: exchange variations over investments abroad registered as
accumulated translation adjustment, on Company’s equity.
4) NUMBER PORTABILITY
In September, 2008, the number portability process has been activated under commercial disposition between
companies that offer the same service mode. As a result, fixed and mobile’s clients can keep their phone
number when changing operator or address, if the process refers to the same local area. Following this, Telesp
reinforced its efforts in customers’ loyalty and retention plans, although the volume of number portability
processes isn’t relevant so far. The number portability’s process was concluded in March, 2009.
Earnings Release – 2009
Telecomunicações de São Paulo S/A – TELESP
São Paulo, February 11, 2010
13
CAPITAL MARKET
Telesp has common shares (ON) and preferred shares (PN) traded on BM&FBOVESPA under the ticker symbols
TLPP3 and TLPP4, respectively. The Company also has ADRs, which are traded on the NYSE, under ticker symbol
TSP.
The shares TLPP3 and TLPP4 closed the year priced at R$37.96 and R$43.54, presenting, respectively, an annual
performance of 2.6% and -4.7% in comparison to Bovespa Index’s performance of 82.7%. The ADRs closed the
year priced at US$25.16, presenting an annual performance of 29.0% in comparison to Dow Jones Index’s
performance of 21.7%.
The daily average volume of TLPP3 and TLPP4 between December, 2008 and December, 2009 was of R$617.7
thousand and R$5,630.3 thousand, respectively. The ADR daily average volume for the same period was of
US$2,194.3 thousand.
The shares performances in the last two years are presented in the following graphic:
Telesp's Stocks Performance (Base 100 on December 28, 2007)
30
70
110
150
Dec-07 Apr-08 Aug-08 Dec-08 Apr-09 Aug-09 Dec-09
TLPP3
TLPP4
Ibovespa
TSP
Dow Jones
Earnings Release – 2009
Telecomunicações de São Paulo S/A – TELESP
São Paulo, February 11, 2010
14
DIVIDENDS AND INTEREST ON OWN CAPITAL
In accordance to the Company’s Bylaws, the Company shall distribute dividends of at least 25% of adjusted net
income for the year, provided that amounts are available, being preferred shares entitled to dividends 10%
higher that those attributed to common shares.
In 2009, Telesp presented a dividend yield of 7.2% for common shares and 6.9% for preferred shares.
The dividends deliberated recently are described in the following table:
Event Deliberation
Shareholding Position
Gross Amount (Reais Million)
Net Amount (Reais Million)
SharesGross Amount
per Share (in Reais)
Net Amount Per Share
(in Reais)
Payment Beginning
date
ON 0.379936 0.322946
PN 0.417929 0.355240
ON 0.741338 0.630138
PN 0.815472 0.693151
ON 0.871073 0.871073
PN 0.958180 0.958180
ON 0.732276 0.732276
PN 0.805504 0.805504
ON 0.770992 0.655343
PN 0.848091 0.720877
ON 2.020147 2.020147
PN 2.222162 2.222162
ON 0.370669 0.315069
PN 0.407736 0.346576
ON 0.898873 0.898873
PN 0.988760 0.988760
ON 0.650410 0.650410
PN 0.715451 0.715451
174.3to be
determinedInterest on Own Capital 12/9/2009 12/30/2009 205.0
340.0 12/21/2009Interest on Own Capital 9/30/2009 9/30/2009 400.0
Dividends
Interim Dividends
350.9 350.9
3/25/2009
12/30/2008 416.0 353.612/9/2008
3/25/2009
6/23/20083/26/2008
5/20/2008 485.0 485.05/20/2008
3/26/2008
6/23/20085/20/2008 200.0
6/23/2008
5/20/2008
11/24/2008 1,090.0 1,090.011/24/2008
Interest on Own Capital
Interim Dividends
Interest on Own Capital
6/17/2009
6/17/2009
12/10/2008
170.0
395.1 395.1Dividends
470.0 6/17/2009Dividends 5/18/2009 5/18/2009 470.0
Earnings Release – 2009
Telecomunicações de São Paulo S/A – TELESP
São Paulo, February 11, 2010
15
INCOME STATEMENT
Unaudited consolidated figures (Reais Million)
2009 2008 % var 4Q09 4Q08 % var
Gross Operating Revenues 23,155.8 23,020.8 0.6 5,721.9 5,956.3 (3.9)
Monthly subscription fee 5,226.2 5,312.9 (1.6) 1,299.5 1,349.0 (3.7)
Installation charge 108.8 114.3 (4.8) 29.7 20.1 47.3
Local service 2,416.9 2,736.8 (11.7) 585.9 655.7 (10.7)
DLD 3,870.9 3,808.8 1.6 988.5 1,003.6 (1.5)
Fixed-to-mobile 4,101.9 4,372.0 (6.2) 993.2 1,115.2 (10.9)
ILD 112.6 140.4 (19.8) 25.7 31.2 (17.4)
Interconnection 487.8 465.8 4.7 141.5 116.0 22.0
Public telephony 386.6 444.9 (13.1) 74.5 105.0 (29.1)
Data transmission 4,176.0 3,759.5 11.1 997.4 1,025.1 (2.7)
Infrastructure Rental 509.3 384.3 32.5 139.8 98.6 41.8
Pay TV 600.3 379.0 58.4 151.7 134.6 12.7
Others 1,158.6 1,102.1 5.1 294.4 302.2 (2.6)
Deductions (7,360.0) (7,041.8) 4.5 (1,730.8) (1,832.0) (5.5)
Net Operating Revenues 15,795.8 15,979.0 (1.1) 3,991.1 4,124.3 (3.2)
Operating Expenses (9,919.0) (9,423.6) 5.3 (2,595.7) (2,418.7) 7.3
Personnel expenses (700.7) (748.8) (6.4) (159.3) (179.1) (11.1)
Supplies (232.7) (222.7) 4.5 (82.8) (67.1) 23.4
Outsourcing expenses (3,852.6) (3,344.4) 15.2 (1,072.2) (916.1) 17.0
Interconnection expenses (3,803.0) (3,855.3) (1.4) (904.3) (1,009.6) (10.4)
Rental expenses (568.7) (492.2) 15.6 (158.5) (128.5) 23.3
Taxes (433.1) (444.5) (2.6) (106.2) (100.4) 5.8
Bad Debt provision (564.6) (538.6) 4.8 (121.0) (142.9) (15.4)
Investment gains (losses) 18.8 8.3 n.a. 5.9 2.3 n.a.
Other operating revenues (expenses) 217.6 214.6 1.4 2.6 123.0 (97.8)
Earnings Before Depreciation/Amortization
and Financial Revenues (Expenses) - EBITDA
Depreciation and Amortization (2,505.5) (2,775.6) (9.7) (605.2) (715.4) (15.4)
Financial Result (194.6) (227.5) (14.5) (51.2) (43.5) 17.8
(14.4) (50.6) (71.6) 6.1 (10.7) n.a.
Income Before Taxes 3,162.3 3,501.7 (9.7) 745.1 936.1 (20.4)
Taxes (989.3) (1,082.3) (8.6) (200.3) (212.3) (5.7)
Net Income 2,173.0 2,419.4 (10.2) 544.8 723.7 (24.7)
1,705.6 (18.2)
Net Result of Asset Sale and Investment
5,876.8 6,555.4 (10.4) 1,395.4
Note: According to Anatel's instructions, Monthly Subscription fee, Local Service, PayTV and Other revenues presented reclassifications in
2008.
Earnings Release – 2009
Telecomunicações de São Paulo S/A – TELESP
São Paulo, February 11, 2010
16
BALANCE SHEET
Unaudited consolidated figures (Reais Million)
A S S E T S 2009 2008 % var
Current assets 7,048.3 6,491.6 8.6
Cash and cash equivalents 2,277.0 1,741.0 30.8
Cash 10.1 32.0 (68.4)
Financial Investments 2,266.9 1,709.0 32.6
Net accounts receivable from customers 2,931.3 3,152.8 (7.0)
Supply and maintenance inventories 148.4 164.4 (9.7)
Recoverable taxes 1,335.6 1,064.3 25.5
Recoverable prepaid expenses 60.3 63.5 (5.1)
Credit from associated companies 120.3 130.4 (7.8)
Derivatives operations 0.6 95.7 (99.4)
Other assets 174.9 79.4 n.a.
Non-Current Assets 13,413.2 13,500.4 (0.6)
Long-term assets 1,943.8 1,742.7 11.5
Accounts receivable from customers 123.7 61.6 n.a.
Recoverable taxes 701.1 813.5 (13.8)
Loans and financial investments 12.9 12.5 3.1
Bail of legal proceedings 939.8 711.3 32.1
Credit from associated companies 23.5 22.9 3.0
Other assets 142.8 121.0 18.1
Investments 340.3 301.8 12.7
Net Permanent Assets 9,672.1 9,868.9 (2.0)
Net Intangible 1,456.9 1,587.0 (8.2)
Total Assets 20,461.4 19,992.0 2.3
L I A B I L I T I E S
Current liabilities 7,654.5 5,846.9 30.9
Suppliers 2,362.4 2,314.7 2.1
Loans and financing 1,767.6 518.8 n.a.
Derivatives operations 8.4 15.2 (44.8)
Payroll and related charges 142.2 174.7 (18.6)
Taxes 1,022.4 926.4 10.4
Consignments 148.0 198.1 (25.3)
Dividends and interest on capital 1,747.2 1,153.7 51.4
Accrual for contingencies 183.3 128.5 42.7
Payables to associated companies 118.2 49.9 n.a.
Other liabilities 154.8 367.0 (57.8)
Non-Current Liabilities 2,749.5 4,099.4 (32.9)
Loans and financing 1,752.4 3,217.4 (45.5)
Taxes 54.6 47.4 15.1
Derivatives operations 23.3 22.1 5.1
Accrual for contingencies 524.2 570.8 (8.2)
Provisions for the pension plans 191.9 148.8 29.0
Other liabilities 203.2 93.0 n.a.
Shareholders' equity 10,057.4 10,045.7 0.1
Capital Stock 6,575.5 6,575.5 0.0
Capital Reserves 2,670.5 2,670.5 0.0
Profit Reserves 659.6 659.6 0.0
Goodwill Reserves 63.1 63.1 0.0
Equity Adjustment 90.9 76.2 19.3
Conversion's Acumulated Adjustment (2.1) 0.9 n.a.
Retained earnings 0.0 0.0 n.a.
Total Liabilities 20,461.4 19,992.0 2.3
Earnings Release – 2009
Telecomunicações de São Paulo S/A – TELESP
São Paulo, February 11, 2010
17
STATEMENT OF CASH FLOW
Unaudited consolidated figures (Reais Million)
2009 2008
Cash and cash equivalents at beginning of the period 1,741.0 933.3
Net income of the period 2,241.4 2,420.0
Non-cash expenses (revenues) 3,063.5 3,630.4
Depreciation and amortization 2,505.5 2,657.9
Exchange variations on loans and financing (49.8) 209.6
(Gain)/loss on subsidiaries (18.8) (8.3)
(Gain)/loss on asset sale 14.4 50.6
Amortization of investment goodwill 0.0 117.7
Bad debt provision 564.6 538.6
Pension and other post-retirement benefit plans 43.2 53.3
Others 4.5 10.9
Variations in operating assets (777.0) (1,117.3)
Net trade accounts receivable (385.1) (830.4)
Other current assets (259.7) (60.5)
Other non-current assets (132.2) (226.3)
Variations in operating liabilities (114.5) 196.8
Payroll and related accuruals (9.6) (104.2)
Accounts payable and accurued expenses 31.2 264.0
Taxes (54.5) 30.9
Other current liabilities 88.7 126.5
Accured interest (47.4) (9.5)
Income and social contribution taxes 141.7 (56.1)
Labor, tax and civil provisions 8.2 58.0
Other non-current liabilities (272.8) (112.8)
Cash provided by operations 4,413.4 5,129.9
Cash flow from investing activities (2,295.9) (2,074.6)
Acquisition of investmens and advances to related companies 0.0 0.0
Acquisition of fixed and intangible assets, net of donations (2,324.1) (2,102.4)
Cash from sales of fixed assets and investment 28.2 27.4
Cash received from acquisitions 0.0 0.4
Cash flow from financing activities (1,581.5) (2,247.5)
Loans amortization (396.9) (1,041.4)
New loans obtained 272.6 1,274.4
Net payment on derivative contracts 31.5 (262.7)
Dividends and interest on own capital paid (1,488.7) (2,217.8)
Increase (decrease) in cash and cash equivalents 536.0 807.7
Cash and cash equivalents at end of the period 2,277.0 1,741.0
% var
86.5
(7.4)
(15.6)
(5.7)
n.a.
n.a.
(71.6)
n.a.
4.8
(19.1)
(58.4)
(30.5)
(53.6)
n.a.
(41.6)
n.a.
(90.8)
(88.2)
n.a.
(29.8)
n.a.
n.a.
(85.9)
n.a.
(14.0)
10.7
n.a.
10.5
3.2
n.a.
(29.6)
(61.9)
(78.6)
n.a.
(32.9)
(33.6)
30.8
Earnings Release – 2009
Telecomunicações de São Paulo S/A – TELESP
São Paulo, February 11, 2010
18
OPERATING DATA
Consolidated data 1Q09 4Q08
2009 2008 % var 4Q09 4Q08 % var
Capital Expenditure (Economic) R$ MM 2,221.0 2,342.5 1/ (5.2) 817.4 861.6 1/ (5.1)
Network
Installed lines (switching) 14,832,406 14,697,287 0.9 14,832,406 14,697,287 0.9
Installed lines - Gain 135,119 143,386 (5.8) 31,824 33,340 (4.5)
Lines in service 11,257,956 11,661,900 (3.5) 11,257,956 11,661,900 (3.5)
Residential 8,062,519 8,489,628 (5.0) 8,062,519 8,489,628 (5.0)
Non-residential 1,606,732 1,701,510 (5.6) 1,606,732 1,701,510 (5.6)
Trunk lines 2/ 948,608 838,843 13.1 948,608 838,843 13.1
Public lines 250,518 250,278 0.1 250,518 250,278 0.1
Internally used and test lines 389,579 381,641 2.1 389,579 381,641 2.1
Lines in services - Gain (403,944) (303,385) 33.1 (94,160) (198,841) (52.6)
Average lines in service (ALIS) 11,459,690 11,881,523 (3.6) 11,291,584 11,793,482 (4.3)
Broadband 2,636,344 2,555,376 3.2 2,636,344 2,555,376 3.2
Pay TV 3/ 486,614 472,222 3.0 486,614 472,222 3.0
Traffic
Local minutes - registered (min 000) 51,522,200 51,753,710 (0.4) 13,938,186 12,594,470 4/ 10.7
Local minutes - exceeding (min 000) 21,533,772 28,273,289 (23.8) 5,049,317 6,557,283 4/ (23.0)
Domestic Long Distance4/ (min 000) 10,747,892 11,763,484 (8.6) 2,655,331 2,902,075 (8.5)
International Long Distance (min 000) 63,843 84,714 (24.6) 14,102 20,198 (30.2)
Monthly traffic per ALIS
Local (min) 375 363 3.2 411 356 15.6
DLD (min) 78 83 (5.3) 78 82 (4.4
ILD (min) 0.5 0.6 (21.9) 0.4 0.6 (27.1)
Others
Employees 5/ 6,171 6,057 1.9 6,171 6,057 1.9
LIS per employee 6/ 2,252 2,347 (4.1) 2,252 2,347 (4.1)
Monthly net op. revenue per ALIS (R$) 114.9 112.1 2.5 117.8 116.6 1.1
Telephone density (per 100 inh.) 7/ 27.1 28.7 (1.6) p.p. 27.1 28.7 (1.6) p.p.
1/ With the introdution of Law# 11,638/07, the Capex showed a decrease due the change on PDTI's accounting.
2/ Includes ISDN clients.
3/ Includes TV clients via Satellite and MMDS.
4/ Includes intra-state and inter-state traffic (fixed-to-fixed and fixed-to-mobile).
5/ Includes Telefônica Sistema de Televisão S.A.'s employees.
6/ End of period data. Includes broadband clients.
7/ The rate was estimated over IBGE Data.
)
Earnings Release – 2009
Telecomunicações de São Paulo S/A – TELESP
São Paulo, February 11, 2010
19
TARIFFS - FIXED LINE SERVICES
LOCAL SERVICE TARIFFS(R$ - including taxes)
Date Installation Charge Public Telephony Local Pulse
Residential Non-residential Trunk Line Credit Basic PASOO
Jul 02, 2004 64.16 33.45 50.41 50.41 0.1020 0.12918
Sep 01, 2004 73.10 34.50 54.35 54.35 0.1053 0.13324
Nov 01, 2004 82.06 35.55 58.29 58.29 0.1080 0.13730
Jul 03, 2005 88.01 38.13 62.52 62.52 0.1165 0.14728
Jul 14, 2006 106.81 37.98 65.12 65.12 0.1160 0.14672 0.09557 0.03667
Jul 20, 2007 109.16 38.80 66.55 66.55 0.1185 0.14995 0.09767 0.03747
Jul 24, 2008 112.44 39.97 68.56 68.56 0.1215 n.a. 0.10060 0.03859
Sep 16, 2009 113.53 40.35 69.22 69.22 0.1225 n.a. 0.10158 0.03899
DLD TARIFFS(R$ - including taxes, per minute, normal rates, without discounts)
Date D1 D2 D3 D4
(up to 50km) (50 to 100km) (100 to 300km) (over 300km)
Jul 02, 2004 0.133 0.213 0.292 0.400
Sep 01, 2004 0.144 0.230 0.316 0.397
Nov 01, 2004 0.155 0.248 0.340 0.394
Jul 03, 2005 0.155 0.248 0.340 0.414
Jul 20, 2006 0.143 0.221 0.310 0.414
Jul 20, 2007 0.146 0.224 0.320 0.414
Jul 24, 2008 0.146 0.228 0.340 0.428
Sep 16, 2009 0.14563 0.22752 0.33966 0.43722
Monthly Subscription Fee Local Minute
INTERCONNECTION TARIFFS FIXE-TO-MOBILE TARIFFS
(R$ - including taxes, per minute, without discounts) (R$ - including taxes, per minute, without discounts)
Date Fixed-Mobile
TU-RL TU-RIU VUM VC-1 VC-2 VC-3
Feb 11, 2004 0.34990-0.41640 0.6085-0.6805 1.354 1.540
Jul 02, 2004 0.047 0.106
Sep 01, 2004 0.049 0.112
Nov 01, 2004 0.052 0.118
Jun 12, 2005 0.36564-0.43513 0.65714-0.73486
Jul 03, 2005 0.045 0.121
Jan 01, 2006 0.036 0.095 (*)
Mar 31, 2006 1.462 1.663
Jul 14, 2006 0.035
Jul 20, 2006 0.028 0.10185(*)
Jul 20, 2007 0.029 0.10185(*) 0.37387-0.44493 0.67875-0.75903 1.510 1.718
Jul 24, 2008 0.030 0.11601(*) 0.39603-0.47130 0.69918-0.78187 1.55537 1.76971
Sep 16, 2009 0.03008 0.11573(*)
(*) Average of the 4 time-periods.
Fixed-to-Fixed Fixed-Mobile
Notes:
a) Effective as of September 16, 2009, the maximum net tariffs of Local Services, through Anatel's Edict# 5,180 of September 11, 2009, had an readjustment of
0.98% throughout the sectors 31, 32 and 34, incorporating the productivity gain of 3.9%, according to the foreseen rules in the Concession Agreement.
b) Effective as of September 16, 2009, the maximum net tariffs of Domestic Long Distance Services, through Anatel's Edict# 5,179 of September 11, 2009, had
an average readjustment of 0.98% throughout the sectors 31, 32 and 34, incorporating the productivity gain of 3.9%, according to the foreseen rules in the
Concession Agreement.
Earnings Release – 2009
Telecomunicações de São Paulo S/A – TELESP
São Paulo, February 11, 2010
20
SHAREHOLDING STRUCTURE
Telefónica, S.A.
Telefónica Internacional S.A.
SP Telecomunicações Participações Ltda.
Telecomunicações de São Paulo S/A - TELESP Other Shareholders
100%
100%
ON 50.71% PN 8.61%
ON 34.87% PN 80.53%
ON 14.30% PN 10.81%
CAPITAL STRUCTURE COMPOSITION
As of December 31, 2009
Telecomunicações de São Paulo S/A - TELESP Common Preferred Total
Controlling Company 144,462,997 300,749,951 445,212,948
85.57% 89.13% 87.95%
Minority shareholders 24,146,294 36,482,238 60,628,532
14.30% 10.81% 11.98%
Treasury shares 210,579 185,213 395,792
0.12% 0.05% 0.08%
Total number of shares 168,819,870 337,417,402 506,237,272
Book Value per share (R$): 19.88
Capital stock - in thousands of R$ (as of 12/31/09): 6,575,480
DISCLAIMER
This document contains statements that constitute forward-looking statements in its general meaning and within the meaning of the Private Securities Litigation Reform Act of 1995. These statements appear in a number of places in this document and include statements regarding the intent, belief or current expectations of the customer base, estimates regarding future growth in the different business lines and the global business, market share, financial results and other aspects of the activity and situation relating to the Company. The forward-looking statements in this document can be identified, in some instances, by the use of words such as "expects", "anticipates", "intends", "believes", and similar language or the negative thereof or by forward-looking nature of discussions of strategy, plans or intentions.
Such forward-looking statements are not guarantees of future performance and involve risks and uncertainties and actual results may differ materially from those in the forward-looking statements as a result of various factors.
Analysts and investors are cautioned not to place undue reliance on those forward-looking statements, which speak only as of the date of this presentation. The Company undertakes no obligation to release publicly the results of any revisions to these forward looking statements which may be made to reflect events and circumstances after the date of this presentation, including, without limitation, changes in Company’s business or acquisition strategy or to reflect the occurrence of unanticipated events. Analysts and investors are encouraged to consult the Company's Annual Report as well as periodic filings filed with the relevant Securities Markets Regulators, and in particular with the Brazilian Market Regulator.
The Complete Financial Statements, including Explanatory Notes, are available at the Company’s Investor Relations Website: http://www15.telefonica.com.br/investidores/.