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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
FORM 6-K
 
REPORT OF FOREIGN ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 OF THE
SECURITIES EXCHANGE ACT OF 1934
 
THROUGH AUGUST 01, 2006

(Commission File No. 1-14477)
 
 
BRASIL TELECOM PARTICIPAÇÕES S.A.
(Exact name of registrant as specified in its charter)
 
BRAZIL TELECOM HOLDING COMPANY
(Translation of Registrant's name into English)
 

SIA Sul, Área de Serviços Públicos, Lote D, Bloco B
Brasília, D.F., 71.215-000
Federative Republic of Brazil
(Address of Regristrant's principal executive offices)


Indicate by check mark whether the registrant files or will file
annual reports under cover Form 20-F or Form 40-F.

Form 20-F ___X___ Form 40-F ______

Indicate by check mark if the registrant is submitting the Form 6-K
in paper as permitted by Regulation S-T Rule 101(b)(1)__.

Indicate by check mark if the registrant is submitting the Form 6-K
in paper as permitted by Regulation S-T Rule 101(b)(7)__.

Indicate by check mark whether the registrant by furnishing the
information contained in this Form is also thereby furnishing the
information to the Commission pursuant to Rule 12g3-2(b) under
the Securities Exchange Act of 1934.

Yes ______ No ___X___

If "Yes" is marked, indicated below the file number assigned to the
registrant in connection with Rule 12g3-2(b):

 



BRASIL TELECOM REACHES NET INCOME OF R$105 MILLION IN 2Q06

Brasília, August 2nd, 2006 - Brasil Telecom Participações S.A. (BOVESPA: BRTP3/BRTP4; NYSE: BRP) announces its consolidated results for the second quarter of 2006 (2Q06). The Company’s unaudited financial statements are presented in million of Reais, except when stated otherwise, and are in conformity with generally accepted accounting principles in Brazil.

HIGHLIGHTS

     
 
IR CONTACTS     
Ricardo Florence (Head of IR) Phone: (55 61) 3415-1140  rflorence@brasiltelecom.com.br 
Ruy Nagano  Phone: (55 61) 3415-1291  ruy.nagano@brasiltelecom.com.br 
Carla Bernardes  Phone: (55 61) 3415-1123  carla.bernardes@brasiltelecom.com.br 
Remi Kaiber Junior  Phone: (55 61) 3415-1411  remi@brasiltelecom.com.br 
 
     
 
MEDIA CONTACTS     
Cesar Borges  Phone: (55 61) 3415-1378  cesarb@brasiltelecom.com.br 
Rui Xavier (Director) Phone: (55 61) 3415-9657  rui@brasiltelecom.com.br 
 
     

Brasil Telecom Participações S.A. controls Brasil Telecom S.A., a telecommunications company which provides fixed line telephony services in local, domestic long distance, international long distance, mobile telephony, public telephony, data communication, network and value added services in the states of Rondônia, Acre, Mato Grosso, Mato Grosso do Sul, Tocantins, Goiás, Santa Catarina, Paraná and Rio Grande do Sul, as well as in the Federal District. Its coverage area corresponds to 24% of the population (approximately 44 million inhabitants), 27% of the GDP (approximately R$420 billion in 2003) and 33% of the Brazilian territory (about 2.8 million km²).

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         OPERATING PERFORMANCE

         WIRELINE TELEPHONY

         NETWORK

The utilization rate registered a 1.1 p.p. reduction throughout 2Q06, reaching 87.1% . Brasil Telecom has a technical reserve of approximately 1.4 million lines installed to serve immediately an increase in demand with no additional investments needed. By the end of 2Q06, Brasil Telecom’s plant had 10.8 million lines installed and 9.4 million lines in service (Annex XVI).

The hybrid terminal – LigMix – maintained an 8.7% stake regarding lines in service by the end of June. The hybrid terminal is only offered in switching stations where there is idle capacity when the client’s bad debt is confirmed, or through marketing campaigns directed to low income households. As of September, Brasil Telecom’s pre-paid terminals will be replaced by hybrid terminals and by the AICE.

         TRAFFIC

In 2Q06, Brasil Telecom reached 2.1 billion billed pulses, a 6.5% reduction in comparison to 1Q06 (Annex XIV). Such reduction can be explained by fewer business days during 2Q06, the occurrence of the World Cup and the growth of mobile and broadband subscriber base.

Long distance traffic decreased 4.0% in comparison to 1Q06, thus Brasil Telecom registered 1.4 billion minutes in 2Q06 (Annex XV). Among the factors that explain such reduction are the occurrence of fewer business days in the quarter and an increase in long distance plans which include minutes packages and greater competition.

At the end of 2Q06, Brasil Telecom reached a 61.8% market share in the interregional segment and a 35.6% market share in the international segment (quarterly average).

By the end of March, Brasil Telecom’s quarterly average long distance market share reached 84.8% in the intra-regional segment, 0.7 p.p. superior than the 84.1% market share registered in 2Q05. In the interregional and international segments, Brasil Telecom achieved market share of 7.0 p.p. and 4.4 p.p., respectively, in 12 months.


PS: The market shares hereby presented refer to Brasil Telecom’s concession area (Region II of the PGO – General Concession Plan), except when mentioned otherwise.
 

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       MOBILE TELEPHONY

BrT Mobile reached 2,772 thousand mobile accesses in service (Annex XIX), a net addition of 310.9 thousand accesses in the quarter, against a reduction in Region II of 272 thousand accesses. This number represents 51.4% of the Company’s goal for 2006, of 1,087 thousand accesses. At the end of 2Q06, BrT Mobile’s subscriber base was 12.6% higher than 1Q06 and in comparison with 2Q05, there was a 106.1% increase.

During the 2Q06, BrT Mobile increased its coverage to 796 localities. Currently, its coverage reaches 87% of the Region’s population.

In June, BrT Mobile reached 100% of the quality goals established by Anatel. Additionally, BrT Mobile was awarded the BVQI (Bureau Veritas Quality International)/Inmetro certification for the registration, collection, tariff settlement and invoicing of calls, assuring the correct charging of calls effectively made. Thus, BrT Mobile is the only mobile company to receive such certification.

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At the end of June, our mobile operations had 900.2 thousand post-paid subscribers (representing 32.5% of our customer base), which represented the best post-paid mix among the mobile operators present in Brazil.

At the end of 2Q06, BrT Mobile achieved a 10.7% market share in its area of operations, compared to 9.4% in 1Q06 and 5.9 in 2Q05. In the Mid-western and Northern regions, BrT Mobile reached 13.7% market share, surpassing the company which entered third in the market. BrT Mobile has already surpassed the third company to enter the market in terms of market share in the Federal District and in the states of Acre, Rondônia, Tocantins, Mato Grosso and Goiás.

         DATA

During 2Q06, Brasil Telecom added 70.8 thousand accesses to its plant, amounting to 1,154.9 thousand broadband accesses in service by the end of June, an increase of 6.5% and 54.5% in comparison to 1Q06 and 2Q05, respectively (Annex XVI). ADSL penetration (ADSL/LIS) reached 12.3% in 2Q06, against 11.3% in 1Q06 and 7.8% in 2Q05. This penetration is the highest among incumbents.

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By the end of June, 2006, Brasil Telecom registered growth in the following data transmission services for the corporate market: (i) Interlan, a solution to connect more than two spots to a concentrating spot, transmitting voice and data,(ii) Dedicated IP, which is an internet access service with speeds up to 155 Mbps, (iii) Serviço Plus, which is a data transport service and (iv) IP Turbo, a symmetric access to the internet at 512 Kbps, without the need for an internet service provider.

         INTERNET SERVICE PROVIDERS

Brasil Telecom Internet (“BrTi”) the leader in the Brazilian dial-up internet market, has approximately 3.5 million active users of dial-up access which, altogether, generated 10.4 billion minutes in 2Q06, a 15.5% growth in comparison to the traffic generated in 1Q06, when it reached 9.0 billion minutes, due, mainly to seasonal effects. Altogether, the three Internet Service Providers have approximately 1.1 million subscribers which pay for services, including broadband accesses and value added services, against 976 thousand clients in 1Q06.

By the end of May, Caio Túlio Costa was appointed CEO of BrTi and Bruno Sena was appointed COO. Thus, Brasil Telecom reinforces its internet strategy and intensifies its actions in this market, seeking to increase its line of products for clients with digital convergence, interactivity and multimedia.

IBest, the largest dial up ISP in Region II, with an estimated market share of 53.7% in 2Q06, 1.7 p.p. greater than 1Q06, is present in more than 1,700 cities, has a subscriber base of approximately 11.5 million registered users and 1.4 million active users.

iG generated 5.1 billion minutes in 2Q06, as compared to 4.6 billion minutes in the previous quarter, which places it as leading traffic generator in Regions I and III. iG is present in more than 2,100 cities and has a subscriber base of 16.4 million registered users and 1.8 million active users. iG's broadband subscriber base increased 72% when compared to the same quarter of 2005, reaching 239 thousand clients by the end of 2Q06. In comparison to 1Q06, iG’s broadband subscriber base increased approximately 15%, when it had 208 thousand users.

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BrTurbo reached 635 thousand clients on Region II by the end of 2Q06, 61.6% and 10%greater in comparison to 2Q05 and 1Q06, respectively. Approximately 55.5% of Brasil Telecom’s broadband accesses were BrTurbo subscribers, a 1.5 p.p. increase as compared to 1Q06, making it market leader in Region II.

At the end of 2Q06, Brasil Telecom had 879 thousand broadband customers in Brazil, an increase of 11% as compared to the 793 thousand broadband clients in 1Q06.

         FINANCIAL PERFORMANCE

         REVENUE


Gross revenue from local service reached R$1,702.2 million in 2Q06, 3.8% lower than 1Q06’s. The subscription and measured service revenues accounted for 70.9% and VC-1 calls accounted for 28.0% of the total revenue from local service (Annex V).

In the first quarter, gross revenue from subscription fees totaled R$871.1 million, a 2.5% reduction in comparison to the R$893.3 million achieved in 1Q06 due to the reduction of 133 thousand lines in service, as well as a reduction of 6.3 thousand hybrid lines.

Gross revenue from measured service totaled R$336.0 million in the 2Q06, 5.5% inferior to the previous quarter, reflecting increase in the mobile subscriber base and the commercialization of ADSL accesses, which caused a 6.5% reduction in the exceeding pulses volume. In comparison to 2Q05, gross revenues from measured service decreased 8.8% , due mainly to the traffic reduction, which reached 14.1% and partially compensated by a 7.27% tariff readjustment in local pulses.

Gross revenues with VC-1 calls reached R$476.2 million in 2Q06, 5.4% inferior than 1Q06, reflecting a reduction in VC-1 traffic. Regarding VC-1 traffic, as of the second semester of 2005, we have been observing a trend for reduction, which reflects the aggressive promotional campaigns of mobile operations focused on mobile-mobile traffic. In comparison to 2Q05, gross revenues with VC-1 calls were 12.1% inferior, explained, mainly, by the 17.6% reduction in traffic, compensated by a 7.99% VC-1 tariff readjustment.

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Gross revenue with public telephony reached R$138.8 million in 2Q06, an 8.5% increase in comparison with the revenue obtained in 1Q06 and 11.9% superior than the revenue in 2Q05. The variation in comparison to 1Q06 is mainly explained by a 6.2% increase in sale of credit. The increase in comparison to 2Q05 was influenced by the 7.37% credit card tariff readjustment.

Gross revenue from LD calls reached R$678.5 million in 2Q06, representing a reduction of 3.6% in comparison to 1Q06. This performance was influenced by a 4.0% reduction in LD traffic. In comparison to 2Q05, LD revenue was 12.9% inferior due to a 15.4% traffic reduction, compensated by a 2.94% tariff readjustment in effect as of July 2005. Another factor that influenced the reduction in LD revenue was the Company’s decision to disencourage LD calls originated outside region II, to avoid fraud.

Interconnection revenue in 2Q06 amounted to R$99.7 million, a 8.1% and 43.1% drop in comparison to 1Q06 and 2Q05. This reduction was influenced by the aggressive promotional campaigns promoted by the mobile operators, which encouraged the mobile-mobile traffic and, additionally, in comparison to 2Q05, there were interconnection tariff reductions which amounted to 13.3% in July 2005 and 19.1% in January 2006.

In 2Q06, gross revenue from data communications and other services reached R$562.6 million, a 4.5% increase as compared to the previous quarter and a 24.6% increase in comparison to 2Q05. ADSL revenues amounted to R$245.1 million, representing 43.6% of the total data communications revenues. The growth in network formation services (DialNet, Serviço Plus, Dedicated IP) and a 6.5% expansion in ADSL accesses in service are worth being noted.


In 2Q06, consolidated gross revenue from mobile telephony totaled R$260.4 million, of which R$187.5 million were related to services and R$69.5 million to the sale of handsets and accessories. This performance represents an increase of 14.4% and 72.8% in comparison to 1Q06 and 2Q05, respectively.

In comparison to 1Q06 and 2Q05, respectively, gross revenues from services with mobile telephony in 2Q06 exceeded in 9.2% and 131.8%, respectively, due to the increase in the subscriber base. Gross revenues from the sale of handsets and accessories increased 27.1% in comparison to 1Q06 due, mainly, by the greater sales volume due to promotions offered on Mother’s Day and Valentine’s Day.

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The blended mobile ARPU in the 2Q06 was of R$26.0 (Annex XVIII). The post-paid ARPU was of R$34.6 and the pre-paid ARPU was of R$21.8. In comparison to 1Q06, the pre-paid ARPU increased 8.3% due to a substantial increase in data communications revenues propelled, mainly, by a promotion made during the World Cup.

Brasil Telecom’s net revenue reached R$2,450.7 million in 2Q06, 1.1% and 2.9% lower than the revenue registered in 1Q06 and 2Q05, respectively (Annex V).

        COSTS AND EXPENSES


In 2Q06, operating costs and expenses amounted to R$2,306.4 million, compared to R$2,321.7 million in 1Q06 and R$2,361.2 million in the 2Q05. The main items that determined such performance were: Personnel (-14.5%), others (-63.2%), materials (25.5%), provisions (19,5%) and marketing and advertising (107.1%) (Annex VI).

At the end of 2Q06, 5,384 employees worked in Brasil Telecom’s wireline segment, against 5,420 employees in the previous quarter. BrT Mobile ended 2Q06 with 632 employees, against 735 in the 1Q06. By the end of June, Brasil Telecom had 6,016 employees, a 2.3% reduction in comparison with March.

Total personnel costs and expenses reached R$162.7 million, a 14.5% reduction as compared to the previous quarter. This variation is explained by the work force reduction which happened in the previous quarter.

Costs and expenses with subcontracted services, excluding interconnection, marketing and advertisement, totaled R$575.2 million in 2Q06, 5.7% superior to the amount registered in the previous quarter. This increase can be partially explained by costs and expenses with call center services, due to an increase in BrT Mobile’s subscriber base.

In the 2Q06, interconnection costs amounted to R$480.6 million, a 3.6% and 20.0% reduction in comparison to 1Q06 and 2Q05, respectively. Such performance reflects BrT Mobile’s gain in scale and a change in the traffic profile, where VC-1 calls, which are large VU-M generators, are decreasing its participation to the total of VC calls. In comparison to 2Q05, there was a negative TU-RL tariff readjustment which amounted to 13.33%, compensated by VU-M and TU-RIU tariff readjustments which amounted to 4.5% and 2.9%, respectively.

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Advertising and marketing expenses amounted to R$42.2 million in 2Q06, a 107.1% increase in comparison to 1Q06, explained by the advertising campaigns on Mother’s Day and Valentine’s Day. BrT Mobile’s costs and expenses with marketing and advertising amounted to R$20.2 million, representing 47.9% of the Group’s total expenses with marketing and advertising.

Losses from Accounts Receivable as a percentage of gross revenue in the 2Q06 were of 2.3%, against 3.1% in the 1Q06. Losses from accounts receivable totaled R$84.3 million in the 2Q06, a 25.2% reduction in comparison to the previous quarter.

In the 2Q06, provisions for contingencies totaled R$140.3 million, an increase of R$65.1 million as compared to the 1Q06, explained by provisions for tax and labor contingencies.

Costs and expenses with materials totaled R$105.2 million in 2Q06, a 25.5% increase in comparison to 1Q06. BrT Mobile’s costs and expenses with materials amounted to R$81.8 million, representing 77.7% of the Group’s total costs and expenses with materials. Excluding BrT Mobile’s costs and expenses with materials, Brasil Telecom’s costs and expenses with materials amount to R$23.5 million in 2Q06, as compared to R$23.0 million and R$24.7 million in 1Q06 and 2Q05, respectively.

Other operating costs and expenses totaled R$46.7 million in the 2Q06, a 63.2% reduction in comparison to 1Q06. The fines due to the termination of operating contracts with maintenance service providers in the amount of R$31.3 million were compensated, among other factors, by the recovery of state and federal taxes.

         EBITDA

Brasil Telecom’s consolidated EBITDA was of R$813.6 million in the 2Q06 (Annex VII). Consolidated EBITDA margin reached 33.2% in 2Q06. In 1Q06, the EBITDA reached R$825.3 million, representing an EBITDA margin of 33.3%, while in 2Q05 it amounted to R$827.6 million with an EBITDA margin of 32.8% (Annex VII).

BrT Mobile’s EBITDA in 2Q06 reached negative R$47.9 million, which represents a negative EBITDA margin of 19.1% . Brt Mobile’s performance in 2Q06 is related to the gain in scale reached by the increase in its subscriber base and by the subscriber acquisition cost (SAC), both are in accordance with the objective established by Brasil Telecom.

         NET EARNINGS

Net income totaled R$105.0 million in 2Q06 (R$0.2885/1,000 shares) (Annex I). Net income/ADR in the period was of US$0.6665. In 2Q05, the Company registered a net income of R$69.0 million, corresponding to R$0.1897/1,000 shares, while net income per ADR amounted R$0.4036.

         INDEBTEDNESS

At the end of June, 2006, Brasil Telecom’s consolidated total debt was of R$4,252.2 million, 2.0% inferior than the amount registered at the end of March (Annex X). As of March, 69.3% of the total debt corresponded to long-term debt (Annex XI).

Brasil Telecom finished 2Q06 with R$2.034,7 million in cash and equivalents, against R$1,865.0 million in March. Additionally, in the 2Q06, the Company had R$191.4 million related to contractual retentions referring to debts’ covenants and R$106.5 million related to temporary short term investments. In 1Q06, contractual retentions amounted to R$191.4 million and there were no temporary investments. The consolidated net debt corresponded to R$1,919.5 million, 15.9% lower than the net debt registered in March. (Annex X).

At the end of June, 2006, the foreign-currency-denominated debt totaled R$1,574.8 million, of which R$522.4 million were denominated in US dollars, R$261.7 million in currency basket and R$790.7 million in Yens (Annex X). On June 30, 2006, 50.0% of our debt affected by exchange rate variation was hedged against

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exchange rate risk. Of our total debt excluding hedge adjustments, 15.1% was exposed to exchange rate variations.

Brasil Telecom’s consolidated debt had a year-to-date cost equivalent to 11.5% p.a., or 72.2% of the Domestic Interbank Rate.

At the end of June 2006, Brasil Telecom’s financial leverage ratio, represented by the ratio of its net debt to shareholders’ equity, was equal to 36.9%, against 43.2% in the previous quarter.

         CAPEX

Brasil Telecom’s CAPEX totaled R$334.9 million in the 2Q06, of which R$274.6 million were invested in the fixed-line network and R$60.3 million in the mobile network (Annex IX). In comparison to 1Q06, total investments increased by 56.0% and are in accordance with the CAPEX schedule for 2006.

         STOCK MARKET

Table 1: Stock Market Performance
 
    Closing Price as 
of Jun, 30, 2006 		   Performance 
   
      In 1Q06    In 12    In 24 
          months    months 
         
Common Shares (BRTP3) (in R$/1,000 shares)   28.55    23.1%    14.3%    93.8% 
Preferred Shares (BRTP4) (in R$/1,000 shares)   14.14    -9.1%    -12.0%    -13.0% 
ADR (BRP) (in US$/ADR)   32.57    -10.3%    -6.0%    22.4% 
Ibovespa (points)   36,631    -3.5%    46.2%    73.2% 
Itel (points)   832    -14.3%    0.6%    -3.1% 
IGC (points)   4,080    -3.7%    62.7%    129.5% 
Dow Jones (points)   11,150    0.4%    8.5%    6.8% 
         

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Table 2: Theoretical Portfolio Participation – April / August 
 
       
    Ibovespa    Itel    IGC 
       
 BRTP3    0.590%    4.953%    0.418% 
 BRTP4    0.784%    11.029%    0.931% 
       

         SHAREHOLDING STRUCTURE

Table 3: Shareholding Structure 

             
Jun/06  Common Shares  %  Preferred Shares  %  Total Shares  % 
             
Solpart Participações S.A.  68,356,160,984  51.0%  26  0.0%  68,356,161,010  18.8% 
ADR  -  0.0%  161,670,140,000  70.3%  161,670,140,000  44.4% 
Treasury  1,480,800,000  1.1%  -  0.0%  1,480,800,000  0.4% 
Other  64,194,727,219  47.9%  68,267,385,658  29.7%  132,462,112,877  36.4% 
             
Total  134,031,688,203  100.0%  229,937,525,684  100.0%  363,969,213,887  100.0% 
             
 
 
             
Mar/06  Common Shares  %  Preferred Shares  %  Total Shares  % 
             
Solpart Participações S.A.  68,356,160,984  51.0%  26  0.0%  68,356,161,010  18.8% 
ADR  -  0.0%  161,670,140,000  70.3%  161,670,140,000  44.4% 
Treasury  1,480,800,000  1.1%  -  0.0%  1,480,800,000  0.4% 
Other  64,194,727,219  47.9%  68,267,385,658  29.7%  132,462,112,877  36.4% 
             
Total  134,031,688,203  100.0%  229,937,525,684  100.0%  363,969,213,887  100.0% 
             

         RECENT DEVELOPMENTS

Notice sent by Telecom Italia

On July 26, 2006, Telecom Italia International N.V. (“TII”) disclosed to the Brazilian Securities and Exchange Commission (CVM – Comissão de Valores Mobiliários) its intention to sell its stake in Solpart Participações S.A., controller of Brasil Telecom Participações S.A. and Brasil Telecom S.A., assisted by J.P. Morgan.

Anatel’s Resolution 438

On July 13, 2006, the new rules for the remuneration for the network usage for the providers of the Personal Mobile Service (SMP – Serviço Móvel Pessoal), was published and came to effect, through Resolution 438, which revoked Resolution 319/02.The main modifications are:

It is not possible at this time to foresee the future impacts of such regulation modification.

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5th Issuance of Debentures

On June 1st, 2006, Brasil Telecom S.A., controlled by Brasil Telecom Participações S.A., held its 5th Issuance of Debentures, being the 4th Public, regarding the Company’s 1st Securities Distribution Program, in the amount of R$1,080,000,000.00. The debentures are remunerated by interest corresponding to 104% of the Interbank overnight rate, being paid semestrally. The resources obtained were registered in Brasil Telecom S.A.’s cash and equivalents on July 7, 2006 and will be used basically to improve the company’s debt structure.

Credit of Interest on Own Capital

On June 29, 2006, Brasil Telecom Participações’ Management Executive Management deliberated, following a delegation from the Board of Directors specified on a meeting held on June 28, 2006, the credit of Interest on Own Capital in the amount of R$185,300,000.00 (one hundred and eighty five million and three hundred thousand reais), which corresponds to a gross amount of R$0.511188752 per one thousand shares or an amount net of income tax of R$0.434510439 per one thousand shares, common and preferred. The date of the credit was June 30th, 2006 and as of July 11, 2006, the shares were traded ex-Interest on Own Capital. The payment date, when resolved, will be informed through the publication of Notice to Shareholders.

Tariffs

On July, 2006, Anatel validated the tariff readjustment for local telephony, reducing the tariffs by 0,4222%. The tariff readjustment combined the rules from the previous concession contracts (for the period of June to December 2005) and the new regulation foreseen in the new contract (period between January and May 2006). The tariff readjustment is in effect as of July.

Telefone Único (CTP – Cordless Telephony Profile)

On July 31st, 2006, Brasil Telecom released CTP (Cordless Telephony Profile) through its Telefone Único – a solution for mobile telephony through the integration and optimization of the fixed and mobile network – increasing its line of converging products. Telefone Único uses a device known as access point, which uses Bluetooth technology, supporting up to three mobile handsets, working as a fixed terminal inside the house or office. When originating a call to the fixed network from a mobile terminal connected to the access point, this device directs the call through the fixed network. When originating a call for the mobile network, the conventional mobile network is used.

IPTV

As of the 3Q06, Brasil Telecom will make available for its clients the IPTV – TV over the internet – increasing its line of converging products. The offer of the product will be based on a monthly subscription, supplying VoD – Video on Demand – and value added services, including entertainment content and on line shopping. The service uses a decoder (set top box) which is connected to a telephone line (with broadband access) and a TV monitor.

         COMING EVENTS

Conference Call and Webcast: 2Q06 Results
Connection number: (+1 973) 582-2700
Access Code: 7587725
Link: http://www.brasiltelecom.com.br/ir/
Date: August 2nd (Tuesday)
Time:  11:00 a.m. (New York time)
            12:00 p.m. (Brasília time)
            04:00 p.m. (London time)

APIMEC – SP Meeting
Date: August 3rd, 2006
Time: 09:00 a.m. (Brasília time)
Place: FGV-SP – Av. Nove de Julho, 2029 Bela Vista – São Paulo – Brazil

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FINANCIAL STATEMENTS

BRASIL TELECOM PARTICIPAÇÕES S.A.

Annex I: Consolidated Income Statement

     
R$ Million    2Q05    1Q06    2Q06    D Quarter    D 12 Months 
     
GROSS REVENUES    3,642.4    3,654.9    3,619.3    -1.0%    -0.6% 
 Fixed Telephony    3,040.2    2,888.9    2,796.3    -3.2%    -8.0% 
     Local Service    1,792.2    1,769.1    1,702.2    -3.8%    -5.0% 
     Public Telephony    124.1    127.9    138.8    8.5%    11.9% 
     Long Distance Service    778.6    703.9    678.5    -3.6%    -12.9% 
     Interconnection    175.3    108.5    99.7    -8.1%    -43.1% 
     Lease of Means    77.7    83.0    80.0    -3.5%    3.0% 
     Supplementary and Value Added Services    83.7    86.2    86.8    0.7%    3.7% 
     Other    8.6    10.4    10.2    -1.8%    18.7% 
Mobile Telephony    150.7    227.6    260.4    14.4%    72.8% 
Data Transmission    451.6    538.4    562.6    4.5%    24.6% 
     
Deductions    (1,119.5)   (1,178.0)   (1,168.6)   -0.8%    4.4% 
NET REVENUES    2,522.9    2,476.9    2,450.7    -1.1%    -2.9% 
     
COSTS & OPERATING EXPENSES    (1,695.3)   (1,651.6)   (1,637.2)   -0.9%    -3.4% 
     Personnel    (159.1)   (190.2)   (162.7)   -14.5%    2.3% 
     Materials    (119.2)   (83.9)   (105.2)   25.5%    -11.7% 
     Subcontracted Services    (538.5)   (544.0)   (575.2)   5.7%    6.8% 
     Interconnection    (600.7)   (498.5)   (480.6)   -3.6%    -20.0% 
     Advertising and Marketing    (59.2)   (20.4)   (42.2)   107.1%    -28.7% 
     Provisions and Losses    (128.0)   (188.0)   (224.7)   19.5%    75.6% 
     Other    (90.7)   (126.7)   (46.7)   -63.2%    -48.6% 
     
EBITDA    827.6    825.3    813.6    -1.4%    -1.7% 
EBITDA Margin    32.8%    33.3%    33.2%    -0.1 p.p.    0.4 p.p. 
Depreciation and Amortization    (665.9)   (670.0)   (669.3)   -0.1%    0.5% 
     
 
OPERATING PROFIT BEFORE FINANCIAL RESULT    161.7    155.2    144.3    -7.0%    -10.8% 
     
Financial Result    (358.4)   (75.3)   (299.2)   297.5%    -16.5% 
     Financial Revenues    336.7    116.1    178.2    53.5%    -47.1% 
     Financial Expenses    (399.7)   (191.4)   (212.0)   10.8%    -47.0% 
     Interest on Shareholders' Equity    (295.4)   -    (265.5)   N.A.    -10.1% 
     
 
OPERATING PROFIT AFTER FINANCIAL RESULT    (196.6)   80.0    (154.9)   N.A.    -21.2% 
 
     
Non-Operating Revenues (Expenses)   (36.7)   (2.5)   (14.3)   467.1%    -60.9% 
     Goodwill Amortization    (31.0)   (0.3)   (0.3)   N.A.    -99.2% 
     Other    (5.7)   (2.3)   (14.1)   N.A.    146.1% 
     
 
EARNINGS BEFORE INCOME AND SOCIAL    (233.4)   77.4    (169.2)   N.A.    -27.5% 
CONTRIBUTION TAXES                     
 
     
Income and Social Contribution Taxes    25.8    (42.1)   47.3    N.A.    83.6% 
     
EARNINGS BEFORE PROFIT SHARING    (207.6)   35.3    (121.9)   N.A.    -41.3% 
     
Minority Interest    (18.7)   (1.8)   (38.5)   N.A.    105.9% 
     
 
EARNINGS BEFORE REVERSION OF INTEREST ON    (226.3)   33.5    (160.5)   N.A.    -29.1% 
SHAREHOLDERS' EQUITY                     
     
Reversion of Interest on Shareholders' Equity    295.4    -    265.5    N.A.    -10.1% 
     
NET EARNINGS    69.0    33.5    105.0    213.0%    52.1% 
     
 
 
     
Net Earnings (Losses)/1,000 shares - R$    0.1897    0.0922    0.2885    213.0%    52.1% 
Net Earnings (Losses)/ADR - US$    0.4036    0.2121    0.6665    214.2%    65.1% 
     

Brasil Telecom Participações S.A.  Página 14 de 27 

Annex II: Consolidated Balance Sheet

   
    Jun/05    Mar/06    Jun/06 
   
 
   
CURRENT ASSETS    5,874.5    5,486.7    5,878.0 
   
 Cash and Equivalents    2,371.6    1,865.0    2,034.7 
 Accounts Receivables (Net)   2,250.2    2,149.0    2,212.3 
 Deferred and Recoverable Taxes    876.8    1,188.2    1,158.9 
 Other Recoverable Amounts    228.6    113.8    322.1 
 Inventory    73.5    80.3    65.4 
 Other    73.8    90.5    84.6 
   
LONG TERM ASSETS    1,930.4    1,851.4    1,901.4 
   
 Loans and Financing    114.5    104.2    98.7 
 Deferred and Recoverable Taxes    1,148.4    1,485.0    1,533.9 
 Other    667.4    262.2    268.7 
   
PERMANENT ASSETS    9,601.2    8,953.8    8,606.9 
   
 Investment (Net)   438.1    386.9    367.0 
 Property, Plant and Equipment (Net)   8,319.2    7,762.1    7,461.3 
         Property, Plant and Equipment (Gross)   25,175.0    26,272.9    26,499.4 
         Accumulated Depreciation    (16,855.8)   (18,510.8)   (19,038.1)
 Deferred Assets (Net)   843.9    804.7    778.6 
   
TOTAL ASSETS    17,406.1    16,291.9    16,386.4 
   
 
CURRENT LIABILITIES    4,059.9    4,325.5    4,677.2 
   
 Loans and Financing    910.3    1,257.3    1,303.7 
 Suppliers    1,523.3    1,378.1    1,422.7 
 Taxes and Contributions    856.1    917.2    890.5 
 Dividends Payable    100.6    117.2    341.9 
 Provisions    327.0    246.5    181.0 
 Salaries and Benefits    94.6    102.3    128.8 
 Consignment for Third Parties    85.7    116.4    177.9 
 Authorization for Services Exploration    46.8    74.8    97.2 
 Other    115.5    115.7    133.6 
   
LONG TERM LIABILITIES    5,454.4    4,801.2    4,666.7 
   
 Loans and Financing    3,531.0    3,082.2    2,948.5 
 Provisions    907.3    1,076.3    1,096.6 
 Taxes and Contributions    712.7    350.6    328.5 
 Authorization for Services Exploration    278.2    259.6    260.2 
 Other    25.2    32.6    32.9 
   
DEFERRED INCOME    90.0    82.7    82.0 
   
MINORITY INTEREST    2,064.9    1,802.8    1,761.2 
   
SHAREHOLDERS' EQUITY    5,736.9    5,279.6    5,199.3 
   
 Capital Stock    2,596.3    2,596.3    2,596.3 
 Capital Reserves    309.2    309.2    309.2 
 Profit Reserves    879.6    282.7    282.7 
 Retained Earnings    1,972.7    2,112.3    2,032.0 
 Treasury Shares    (20.8)   (20.8)   (20.8)
   
TOTAL LIABILITIES    17,406.1    16,291.9    16,386.4 
   

Brasil Telecom Participações S.A.  Página 15 de 27 

Annex III - Consolidated Balance Sheet - Holding

   
                                                       R$ Million    Jun/05    Mar/06    Jun/06 
   
 
   
CURRENT ASSETS    681.9    976.0    1,175.8 
   
 Cash and Equivalents    595.6    833.6    859.7 
 Deferred Taxes    78.1    139.1    172.8 
 Other Recoverable Amounts    2.3    0.6    1.8 
 Dividends / Interest on Shareholders' Equity Receivable    -    -    140.1 
 Other    5.9    2.7    1.4 
   
LONG TERM ASSETS    1,429.5    977.9    998.6 
   
 Loans and Financing    1,146.7    686.1    701.8 
 Deferred and Recoverable Taxes    266.5    247.0    250.4 
 Other    16.4    44.8    46.4 
   
PERMANENT ASSETS    4,238.3    3,747.7    3,660.0 
   
 Investment (Net)   4,237.0    3,746.5    3,658.9 
 Property, Plant and Equipment (Net)   1.3    1.2    1.1 
         Property, Plant and Equipment (Gross)   57.3    57.4    57.4 
         Accumulated Depreciation    (56.1)   (56.2)   (56.3)
 Deferred Assets (Net)   0.1    0.1    0.0 
   
TOTAL ASSETS    6,349.7    5,701.6    5,834.5 
   
 
   
CURRENT LIABILITIES    298.4    354.0    567.4 
   
 Loans and Financing    217.1    275.1    283.2 
 Suppliers    0.5    1.1    0.8 
 Taxes and Contributions    28.6    21.3    40.8 
 Dividends Payable    50.2    56.1    213.3 
 Salaries and Benefits    0.5    0.07    0.0 
 Consignment for Third Parties    0.1    0.1    27.9 
 Other    1.3    0.3    1.4 
   
LONG TERM LIABILITIES    308.6    64.8    65.5 
   
 Loans and Financing    263.9    0.0    - 
 Taxes and Contributions    40.6    60.2    61.5 
 Other    4.1    4.5    4.0 
   
SHAREHOLDERS' EQUITY    5,742.7    5,282.8    5,201.6 
   
 Capital Stock    2,596.3    2,596.3    2,596.3 
 Capital Reserves    309.2    309.2    309.2 
 Profit Reserves    879.6    282.7    282.7 
 Retained Earnings    1,978.5    2,115.5    2,034.3 
 Treasury Shares    (20.8)   (20.8)   (20.8)
   
TOTAL LIABILITIES    6,349.7    5,701.6    5,834.5 
       

Brasil Telecom Participações S.A.  Página 16 de 27 

Annex IV: Cash Flow

     
R$ Million    2Q05    1Q06    2Q06    D Quarter   D 12 Months
     
OPERATING ACTIVITIES                     
(+) Net Income of the Period    69.0    33.5    105.0    213.0%    52.1% 
(+) Minority Participation    18.7    1.8    38.5    N.A.    105.9% 
(+) Items with no Cash Effects    987.7    1,072.5    869.3    -18.9%    -12.0% 
   Depreciation and Amortization    697.2    672.0    671.2    -0.1%    -3.7% 
   Losses with Accounts Receivable from Services    86.0    96.1    105.8    10.0%    23.0% 
   Provision for Doubtful Accounts    (2.8)   16.6    (21.4)   N.A.    676.9% 
   Provision for Contingencies    44.8    75.2    -    -100.0%    -100.0% 
   Provision for Pension Funds    2.3    7.2    12.5    74.6%    434.7% 
   Deferred Taxes    143.3    204.6    104.1    -49.1%    -27.4% 
   Result from the Write-off of Permanent Assets    7.0    0.7    (2.8)   N.A.    N.A. 
   Gains/Losses in Investments    9.9    0.0    (0.0)   N.A.    N.A. 
(-) Equity Changes    415.4    675.1    309.6    -54.1%    -25.5% 
   Clients' Accounts Receivable    146.6    109.0    41.1    -62.2%    -71.9% 
   Inventories    (64.1)   (2.8)   (14.9)   435.6%    -76.8% 
   Contractual Retentions    -    -    191.4         
   Court Deposits    572.5    39.3    50.5    28.6%    -91.2% 
   Personnel, Charges and Social Benefits    (13.7)   3.4    (15.9)   N.A.    16.2% 
   Accounts payable and Provisioned Expenses    27.6    91.4    (45.1)   N.A.    N.A. 
   Financial Charges    (65.7)   37.8    (73.9)        
   Taxes    26.7    226.1    252.1    11.5%    843.2% 
   Provision for Contingencies    (227.4)   110.5    (19.3)   N.A.    -91.5% 
   Provision for Pension Funds    24.3    34.2    29.9    -12.5%    23.2% 
   Other Assets and Liabilities' Accounts    (11.4)   26.2    (86.4)   N.A.    655.2% 
(=) Cash Flow from Operating Activities    660.1    432.8    703.3    62.5%    6.5% 
     
 
INVESTMENT ACTIVITIES                     
   Financial Investments    2.0    (0.0)   (106.5)   N.A.    N.A. 
   Investment Suppliers    -    -    -    N.A.    N.A. 
   Funds from Sales of Permanent Assets    0.9    0.1    9.6    N.A.    1011.8% 
   Investments in Permanent Assets    (423.7)   (623.5)   (274.2)   -56.0%    -35.3% 
(=) Cash Flow from Investment Activities    (420.9)   (623.3)   (371.1)   -40.5%    -11.8% 
     
 
FINANCING ACTIVITIES                     
   Dividens/Interests on Shareholders' Equity paid in the Period    (548.5)   (397.4)   (1.1)   -99.7%    -99.8% 
   Loans and Financing    (126.2)   (160.8)   (161.5)   0.5%    27.9% 
        Loans Obtained    6.7    1.5    30.3    N.A.    354.0% 
        Loans Paid    (132.9)   (162.3)   (191.8)   18.2%    44.3% 
(=) Cash Flow from Financing Activities    (669.8)   (558.1)   (162.6)   -70.9%    -75.7% 
     
      -    -    -         
     
CASH FLOW OF THE PERIOD    (430.7)   (748.7)   169.6    N.A.    N.A. 
     
  Cash and Cash Equivalents - current balance    2,371.6    1,865.0    2,034.7    9.1%    -14.2% 
  Cash and Cash Equivalents - previous balance    2,802.3    2,613.8    1,865.0    -28.6%    -33.4% 
  Variation in Cash and Cash Equivalents    (430.7)   (748.8)   169.7    N.A.    N.A. 
     
      (0.0)   (0.0)   0.1         
     
  OPERATING CASH FLOW    660.1    432.8    703.3    62.5%    6.5% 
(-) Investments on Permanent Assets (includes Investment Suppliers)   (420.9)   (623.3)   (371.1)   -40.5%    -11.8% 
(-) Interest Paid    -    -    -    N.A.    N.A. 
     
(=) FREE CASH FLOW    239.2    (190.6)   332.2    N.A.    38.9% 
     

Obs: Reclassifications were made in some lines of the Cash Flow in 2Q05, seeking to adequate it to the version presented in 1Q06 

Brasil Telecom Participações S.A.  Página 17 de 27 

Annex V: Consolidated Operating Gross Revenue

     
R$ Million    2Q05    1Q06    2Q06    D Quarter    D 12 Months 
     
GROSS REVENUES    3,642.4    3,654.9    3,619.3    -1.0%    -0.6% 
     
FIXED TELEPHONY    3,040.2    2,888.9    2,796.3    -3.2%    -8.0% 
Local Service    1,792.2    1,769.1    1,702.2    -3.8%    -5.0% 
     Activation    7.1    4.2    7.5    78.6%    5.0% 
     Basic Subscription    855.2    893.3    871.1    -2.5%    1.9% 
     Measured Service    368.5    355.6    336.0    -5.5%    -8.8% 
     Lease of Facilities    0.4    0.3    0.4    33.2%    7.6% 
     Other    18.8    12.2    11.0    -9.5%    -41.4% 
     VC-1    542.1    503.5    476.2    -5.4%    -12.1% 
     
Public Telephony    124.1    127.9    138.8    8.5%    11.9% 
     
Long Distance Service    778.6    703.9    678.5    -3.6%    -12.9% 
     Intra-Sector    252.7    230.1    212.4    -7.7%    -16.0% 
     Intra-Region    101.4    82.2    73.3    -10.7%    -27.7% 
     Inter-Region    78.3    69.8    63.8    -8.6%    -18.6% 
     International    16.7    12.7    10.3    -18.7%    -38.1% 
     VC-2    192.5    167.5    180.7    7.9%    -6.1% 
             Fixed Origin    73.4    70.2    68.4    -2.6%    -6.8% 
             Mobile Origin    119.1    97.3    112.3    15.5%    -5.7% 
     VC-3    137.0    141.6    137.9    -2.6%    0.7% 
             Fixed Origin    54.4    58.8    54.0    -8.2%    -0.7% 
             Mobile Origin    82.7    82.8    83.9    1.4%    1.6% 
     
     Interconnection    175.3    108.5    99.7    -8.1%    -43.1% 
             Fixed-Fixed    109.1    71.7    66.7    -7.0%    -38.9% 
             Mobile-Fixed    66.2    36.8    33.0    -10.3%    -50.1% 
     
     Lease of Means    77.7    83.0    80.0    -3.5%    3.0% 
     
     Supplementary and Value Added Services    83.7    86.2    86.8    0.7%    3.7% 
     
     Other    8.6    10.4    10.2    -1.8%    18.7% 
     
MOBILE TELEPHONY    150.7    227.6    260.4    14.4%    72.8% 
         Subscription    44.3    57.8    65.0    12.4%    46.9% 
         Utilization    29.8    79.4    89.5    12.8%    199.9% 
         Interconnection    8.9    26.1    27.0    3.3%    202.5% 
         Other Services    1.1    4.6    6.1    32.6%    476.6% 
         Merchandise Sales (Handsets and Accessories)   66.7    54.6    69.5    27.1%    4.1% 
     
DATA COMMUNICATIONS AND OTHER    451.6    538.4    562.6    4.5%    24.6% 
         Fixed    450.3    521.6    533.7    2.3%    18.5% 
         Mobile    1.3    16.8    28.9    71.6%    2105.1% 
     
Deductions    (1,119.5)   (1,178.0)   (1,168.6)   -0.8%    4.4% 
NET REVENUES    2,522.9    2,476.9    2,450.7    -1.1%    -2.9% 
     

Brasil Telecom Participações S.A.  Página 18 de 27 

Annex VI: Consolidated Operating Costs and Expenses

     
R$ Million    2Q05    1Q06    2Q06    D Quarter    D 12 Months 
     
NET REVENUES    2,522.9    2,476.9    2,450.7    -1.1%    -2.9% 
     
     Costs    (1,645.4)   (1,567.9)   (1,560.8)   -0.5%    -5.1% 
             Personnel    (38.8)   (58.6)   (45.3)   -22.7%    16.7% 
             Materials    (105.1)   (72.0)   (92.8)   28.8%    -11.7% 
             Subcontracted Services    (797.2)   (721.9)   (708.8)   -1.8%    -11.1% 
                   Interconnection    (600.7)   (498.5)   (480.6)   -3.6%    -20.0% 
                   Other    (196.5)   (223.4)   (228.2)   2.2%    16.1% 
             Depreciation and Amortization    (570.2)   (568.9)   (567.5)   -0.2%    -0.5% 
             Other    (134.1)   (146.5)   (146.4)   -0.1%    9.2% 
     
GROSS PROFIT    877.5    909.0    889.9    -2.1%    1.4% 
     
     Sales Expenses    (291.8)   (261.6)   (281.2)   7.5%    -3.6% 
             Personnel    (61.8)   (73.3)   (60.4)   -17.6%    -2.4% 
             Materials    (8.4)   (6.8)   (7.4)   8.1%    -12.5% 
             Subcontracted Services    (216.6)   (168.2)   (198.7)   18.1%    -8.3% 
                   Advertising and Marketing    (59.2)   (20.4)   (42.2)   107.1%    -28.7% 
                   Other    (157.4)   (147.8)   (156.5)   5.8%    -0.6% 
             Depreciation and Amortization    (4.1)   (4.1)   (4.1)   -0.1%    -0.8% 
             Other    (0.8)   (9.2)   (10.6)   15.3%    1209.2% 
     
     General and Administrative Expenses    (216.0)   (206.9)   (219.3)   6.0%    1.6% 
             Personnel    (47.6)   (51.6)   (50.0)   -3.0%    5.2% 
             Materials    (5.3)   (4.5)   (5.0)   10.2%    -5.8% 
             Subcontracted Services    (151.6)   (141.0)   (155.4)   10.2%    2.5% 
             Depreciation and Amortization    (6.6)   (6.1)   (6.0)   -1.4%    -8.9% 
             Other    (4.9)   (3.7)   (3.0)   -20.1%    -39.6% 
     
     Information Technology    (111.1)   (115.9)   (121.0)   4.4%    9.0% 
             Personnel    (10.9)   (6.7)   (7.0)   3.5%    -35.9% 
             Materials    (0.4)   (0.5)   (0.1)   -72.5%    -64.8% 
             Subcontracted Services    (32.9)   (31.8)   (35.1)   10.4%    6.6% 
             Depreciation and Amortization    (61.1)   (69.7)   (71.6)   2.7%    17.3% 
             Other    (5.8)   (7.2)   (7.2)   0.6%    24.1% 
     
     Provisions and Losses    (128.0)   (188.0)   (224.7)   19.5%    75.6% 
             Doubtful Accounts    (83.2)   (112.8)   (84.3)   -25.2%    1.4% 
             Contingencies    (44.8)   (75.2)   (140.3)   86.6%    213.4% 
     
     Other Operating Revenues (Expenses)   31.1    18.7    100.6    436.9%    223.7% 
             Goodwill Amortization    (23.9)   (21.3)   (20.0)   -5.7%    -16.1% 
             Other    54.9    40.0    120.6    201.6%    119.5% 
     
 
OPERATING PROFIT BEFORE FINANCIAL RESULTS    161.7    155.2    144.3    -7.0%    -10.8% 
     

     
R$ Million    2Q05    1Q06    2Q06    D Quarter    D 12 Months 
     
COSTS AND OPERATING EXPENSES    (2,361.2)   (2,321.7)   (2,306.4)   -0.7%    -2.3% 
     Personnel    (159.1)   (190.2)   (162.7)   -14.5%    2.3% 
     Materials    (119.2)   (83.9)   (105.2)   25.5%    -11.7% 
     Subcontracted Services    (538.5)   (544.0)   (575.2)   5.7%    6.8% 
     Interconnection    (600.7)   (498.5)   (480.6)   -3.6%    -20.0% 
     Advertising and Marketing    (59.2)   (20.4)   (42.2)   107.1%    -28.7% 
     Provisions and Losses    (128.0)   (188.0)   (224.7)   19.5%    75.6% 
     Other    (90.7)   (126.7)   (46.7)   -63.2%    -48.6% 
     Depreciation and Amortization    (665.9)   (670.0)   (669.3)   -0.1%    0.5% 
     

Brasil Telecom Participações S.A.    Página 19 de 27 

Annex VII: EBITDA Margin – Gains and Losses

       
R$ Million    2Q05    Vertical    1Q06    Vertical    2Q06    Vertical 
       
GROSS REVENUES    3,642.4    144.4%    3,654.9    147.6%    3,619.3    147.7% 
 Fixed Telephony    3,040.2    120.5%    2,888.9    116.6%    2,796.3    114.1% 
     Local Service    1,792.2    71.0%    1,769.1    71.4%    1,702.2    69.5% 
     Public Telephony    124.1    4.9%    127.9    5.2%    138.8    5.7% 
     Long Distance Service    778.6    30.9%    703.9    28.4%    678.5    27.7% 
     Interconnection    175.3    6.9%    108.5    4.4%    99.7    4.1% 
     Lease of Means    77.7    3.1%    83.0    3.3%    80.0    3.3% 
     Supplementary and Value Added Services    83.7    3.3%    86.2    3.5%    86.8    3.5% 
     Other    8.6    0.3%    10.4    0.4%    10.2    0.4% 
Mobile Telephony    150.7    6.0%    227.6    9.2%    260.4    10.6% 
Data Transmission    451.6    -40.3%    538.4    21.7%    562.6    23.0% 
       
Deductions    (1,119.5)   -44.4%    (1,178.0)   -47.6%    (1,168.6)   -47.7% 
NET REVENUES    2,522.9    100.0%    2,476.9    100.0%    2,450.7    100.0% 
       
COSTS & OPERATING EXPENSES    (1,695.3)   -67.2%    (1,651.6)   -66.7%    (1,637.2)   -66.8% 
     Personnel    (159.1)   -6.3%    (190.2)   -7.7%    (162.7)   -6.6% 
     Materials    (119.2)   -4.7%    (83.9)   -3.4%    (105.2)   -4.3% 
     Subcontracted Services    (538.5)   -21.3%    (544.0)   -22.0%    (575.2)   -23.5% 
     Interconnection    (600.7)   -23.8%    (498.5)   -20.1%    (480.6)   -19.6% 
     Advertising and Marketing    (59.2)   -2.3%    (20.4)   -0.8%    (42.2)   -1.7% 
     Provisions and Losses    (128.0)   -5.1%    (188.0)   -7.6%    (224.7)   -9.2% 
     Other    (90.7)   -3.6%    (126.7)   -5.1%    (46.7)   -1.9% 
       
EBITDA    827.6    32.8%    825.3    33.3%    813.6    33.2% 
       

Annex VIII: EBITDA – Services Net Revenue

     
R$ Million    2Q05    1Q06    2Q06    D Quarter    D12 Months 
     
GROSS REVENUES    3,642.4    3,654.9    3,619.3    -1.0%    -0.6% 
     Services    3,575.7    3,600.2    3,549.8    -1.4%    -0.7% 
     Products    66.7    54.6    69.5    27.1%    4.1% 
DEDUCTIONS    (1,119.5)   (1,178.0)   (1,168.6)   -0.8%    4.4% 
     Services    (1,098.9)   (1,158.6)   (1,146.6)   -1.0%    4.3% 
     Products    (20.6)   (19.4)   (21.9)   12.9%    6.4% 
NET REVENUES    2,522.9    2,476.9    2,450.7    -1.1%    -2.9% 
     Services    2,476.8    2,441.7    2,403.2    -1.6%    -3.0% 
     Products    46.1    35.2    47.5    35.0%    3.1% 
EBITDA    827.6    825.3    813.6    -1.4%    -1.7% 
     EBITDA Margin    32.8%    33.3%    33.2%    -0.4 p.p.    1.2 p.p. 
     EBITDA Margin - Services    33.4%    33.8%    33.9%    0.2 p.p.    1.3 p.p. 
     Variation    0.6 p.p.    0.5 p.p.    0.7 p.p.    N.A.    N.A. 
     

Brasil Telecom Participações S.A.    Página 20 de 27 

Annex IX: CAPEX

   
R$ Million    2Q05    1Q06    2Q06    D Quarter    D 12 Months 
   
Network Expansion    195.3    99.5    153.2    54.0%    -21.6% 
 Conventional Telephony    81.0    0.3    15.8    N.A.    -80.5% 
 Transmission Backbone    15.8    2.4    9.8    305.7%    -38.3% 
 Data Network    88.9    33.9    79.0    132.8%    -11.2% 
 Intelligent Network    4.7    0.7    0.1    -87.8%    -98.1% 
 Network Management Systems    1.6    0.4    0.5    27.0%    -69.7% 
 Other    3.3    61.7    48.1    -22.1%    N.A. 
Network Operation    58.1    50.9    53.1    4.4%    -8.6% 
Public Telephony    0.7    1.4    1.9    33.5%    175.2% 
Information Technology    37.9    8.5    14.8    74.8%    -60.9% 
Expansion Personnel    21.6    26.9    19.5    -27.4%    -9.6% 
Other    37.3    22.3    32.1    43.9%    -14.0% 
Expansion Financial Expenses    1.7    -    -    N.A.    N.A. 
   
Total - Wireline Telephony    352.6    209.4    274.6    -64.2%    -22.1% 
   
 
 
   
R$ Million    2Q05    1Q06    2Q06    D Quarter    D 12 Months 
   
Total - Mobile Telephony    87.4    5.2    60.3    N.A.    -31.0% 
   
 
   
Total Investment in Permanent Assets    440.0    214.6    334.9    56.0%    -23.9% 
   

Annex X: Indebtedness

     
Debt (R$ Million)   Jun 2005    Mar 2006    Jun 2006    D Quarter    D 12 Months 
     
Short Term    910.3    1,257.3    1,303.7    3.7%    43.2% 
In R$    778.3    984.5    1,013.5    2.9%    30.2% 
In US$    45.6    16.8    29.1    73.8%    -36.1% 
In Yen    3.3    80.2    84.7    5.6%    N.A. 
In Currency Basket    49.3    72.4    75.3    4.0%    52.9% 
Hadge Adjustment    33.8    103.3    101.1    -2.2%    198.5% 
Long Term    3,531.0    3,082.2    2,948.5    -4.3%    -16.5% 
In R$    2,112.1    1,795.9    1,663.8    -7.4%    -21.2% 
In US$    543.2    493.2    491.300    -0.4%    -9.6% 
In Yen    458.6    319.3    327.3    2.5%    -28.6% 
In Currency Basket    170.6    173.7    154.1    -11.3%    -9.7% 
Hedge Adjustment    246.5    300.1    312.0    4.0%    26.5% 
Total Debt    4,441.3    4,339.4    4,252.2    -2.0%    -4.3% 
(-) Cash    2,371.6    1,865.0    2,034.7    9.1%    -14.2% 
(-) Contractual Retentions    -    191.4    191.4    0.0%    N.A. 
(-) Temporary Investments    -    -    106.5    N.A.    N.A. 
Net Debt    2,069.7    2,283.0    1,919.5    -15.9%    -7.3% 
     

Brasil Telecom Participações S.A.    Página 21 de 27 

Annex XI: Indebtedness

 
Jun/06    Currency    Annual Cost   Maturity    % Total    Balance 
(in R$ Million)
 
Short Term                30.7%    1,303.7 
 BNDES    R$    TJLP + 6.5%    dec/2007        16.1 
 BNDES    R$    TJLP + 5.85%    dec/2007        361.0 
 BNDES    R$    TJLP + 3.85%    oct/2007        83.5 
 BNDES    R$    Basket + 6.5%    dec/2007        29.3 
 BNDES    R$    Basket + 3.85%    nov/2007        10.1 
 Debentures    R$    TJLP + 4%    jul/2006        283.1 
 BNDES    R$    Basket + 5.5%    apr/2011        35.9 
 BNDES    R$    TJLP + 5.5%    apr/2011        219.8 
 BRDE    R$    IGP-M+12.0%    sep/2006        2.6 
 FCO    R$    14%    jan/2008        5.1 
 BRB - GSM    R$    2.40%    Jan/2034        0.2 
 FCO    R$    14%    Apr/2011        2.0 
 Debentures 3rd Public Issuance    R$    CDI + 1.0%    jul/2009        40.0 
 Bonds - US$ 200 MM    US$    9.38%    feb/2014        17.1 
 Financial Institutions II    US$    Lib6 + 0.5%    jul/2008-jul/2013        11.3 
 Financial Institutions III    Yen$    Jibor6 + 1.92%    mar/2011        84.3 
 Financial Institutions IV    Yen$    3.36%    feb/2009        0.4 
 Suppliers I    US$    Lib3 + 2.0%    jun/2007        0.4 
 Suppliers II    US$    1.75%    feb/2014        0.2 
 Suppliers III    US$    Lib3 + 2.0%    jun/2007        0.1 
 Hedge Adjustment                    101.1 
Long Term                69.3%    2,948.5 
 BNDES    R$    TJLP + 6.5%    dec/2007        7.9 
 BNDES    R$    TJLP + 5.85%    dec/2007        271.5 
 BNDES    R$    TJLP + 3.85%    oct/2007        40.6 
 BNDES    R$    Basket + 6.5%    dec/2007        14.4 
 BNDES    R$    Basket + 3.85%    nov/2007        4.9 
 BNDES    R$    Basket + 5.5%    apr/2011        134.8 
 BNDES    R$    TJLP + 5.5%    apr/2011        790.3 
 FCO    R$    14%    Jan/2008        2.9 
 FCO    R$    14%    Apr/2011        28.8 
 BRB - GSM    R$    2.40%    Jan/2034        17.6 
 BRB - Fixa    R$    2.40%    Jan/2034        4.2 
 Debentures 3rd Public Issuance    R$    CDI + 1.0%    jul/2009        500.0 
 Bonds - US$ 200 MM    US$    9.38%    feb/2014        432.9 
 Financial Institutions I    US$    Lib6 + 0.5%    jul/2008-jul/2013        35.7 
 Financial Institutions II    Yen$    Jibor6 + 1.92%    mar/2011        326.5 
 Financial Institutions III    Yen$    3.36%    feb/2009        0.8 
 Financial Institutions IV    US$    0.0%    dec/2015        21.5 
 Suppliers II    US$    1.75%    feb/2014        1.1 
 Hedge Adjustment                    312.0 
Total Debt                100.0%    4,252.1 
 

Brasil Telecom Participações S.A.    Página 22 de 27 

Annex XII: Long Term Debt Amortization Schedule

 
Maturity    % Long Term Debt 
 
2007    16.2% 
2008    17.7% 
2009    31.3% 
2010    14.2% 
2011    4.3% 
2012    0.0% 
2013 and after    16.2% 
 

Annex XIII: Consolidated Financial Result

     
R$ Million    2Q05    1Q06    2Q06    D Quarter    D 12 Months 
     
Financial Revenue    336.7    116.1    193.7    66.8%    -40.5% 
   Local Currency       157.02    111.3    197.3    77.3%    -31.8% 
   Foreign Currency       179.69    4.8    (3.6)   -173.7%    -84.9% 
Financial Expense       (399.7)   (191.4)   (227.4)   18.9%    -22.6% 
   Local Currency       (175.8)   (150.3)   (182.2)   21.2%    -10.9% 
   Foreign Currency       (224.0)      (41.0)   (45.2)   10.3%    -47.8% 
Interest on Shareholders' Equity       (295.4)   -    (265.5)   N.A.    N.A. 
     
Financial Result       (358.4)      (75.3)   (299.2)   297.5%    44.2% 
     

Annex XIV: Consolidated Accounts Receivable

 
    Jun/05    Mar/06    Jun/06 
 
Total (R$ Million)   2,517.0    2,527.1    2,462.6 
   Due    65.0%    62.7%    62.0% 
   Overdue (up to 30 days)   15.6%    16.4%    15.5% 
   Overdue (between 31-60 days)   5.8%    6.2%    5.1% 
   Overdue (between 61-90 days)   3.5%    3.9%    3.3% 
   Overdue (over 90 days)   10.1%    10.7%    11.6% 
 

Brasil Telecom Participações S.A.    Página 23 de 27 

Annex XV: Traffic

     
TRAFFIC    2Q05    1Q06    2Q06    D Quarter    D 12 Months 
     
Exceeding Pulses (Million)   2,493.4    2,291.2    2,142.2    -6.5%    -14.1% 
     
     VC-1 (million minutes)   849.7    744.7    699.9    -6.0%    -17.6% 
     
Domestic long distance - DLD (million minutes)   1,650.0    1,454.1    1,395.4    -4.0%    -15.4% 
     
     VC-2 (million minutes)   164.1    152.7    159.5    4.4%    -2.8% 
     VC-3 (million minutes)   108.1    104.9    99.5    -5.2%    -8.0% 
     

Annex XVI - Indicators

     
FIXED-LINE NETWORK    2Q05    1Q06    2Q06    D Quarter    D 12 Months 
     
Lines installed (thousand)   10,807.0    10,814.3    10,794.5    -0.2%    -0.1% 
Additional lines installed (thousand)   28.7    (2.0)   (19.8)   891.5%    N.A. 
     
Lines in service - LIS (thousand)   9,540.1    9,543.1    9,407.1    -1.4%    -1.4% 
     Residential (thousand)   6,298.6    6,042.8    5,939.9    -1.7%    -5.7% 
     Non-residential (thousand)   1,449.0    1,432.6    1,401.4    -2.2%    -3.3% 
     Public phones (thousand)   295.8    295.2    290.7    -1.5%    -1.7% 
     Pre-paid (thousand)   314.4    316.6    316.1    -0.2%    0.5% 
     Hybrid (thousand)   557.9    825.6    819.3    -0.8%    46.9% 
     Other (including PBX) (thousand)   625.3    630.1    639.6    1.5%    2.3% 
Additional lines in service (thousand)   27.8    (17.0)   (133.0)   681.2%    N.A. 
Average lines in service (thousand)   9,526.2    9,551.6    9,483.6    -0.7%    -0.4% 
     
LIS/100 Inhabitants    22.4    22.2    21.8    -1.7%    -2.8% 
Public Telephones/1,000 Inhabitants    6.9    6.9    6.7    -1.9%    -2.5% 
Public Telephones/100 Lines Installed    2.7    2.7    2.7    -1.4%    -0.3% 
     
Utilization rate    88.3%    88.2%    87.1%    -1.1 p.p.    -1.1 p.p. 
     
Digitalization rate    99.6%    100.0%    100.0%    0.0 p.p.    0.4 p.p. 
     
Teledensity (LIS/100 inhabitants)   22.4    22.2    21.8    -1.7%    -2.8% 
     
ADSL accesses in service (thousand)   747.4    1,084.1    1,154.9    6.5%    54.5% 
    7.8%    11.4%    12.3%    0.9 p.p.    4.4 p.p. 
     
 
     
PRODUCTIVITY    2Q05    1Q06    2Q06    D Quarter    D 12 Months 
     
# of employees - Fixed Telephony    5,719    5,420    5,384    -0.7%    -5.9% 
Average # of employees    5,702    5,612    5,402    -3.7%    -5.3% 
LIS/employee    1,668    1,761    1,747    -0.8%    4.7% 
     
Gross revenue/average # of employees/month (R$ thousand)   177.7    171.6    172.5    0.5%    -2.9% 
EBITDA/average # of employees/month (R$ thousand)   48.4    49.0    50.2    2.4%    3.8% 
Net earnings/average # of employees/month (R$ thousand)   4.0    2.0    6.5    225.1%    60.5% 
     
Exceeding local pulses/average LIS/month    87.2    80.0    75.3    -5.8%    -13.7% 
DLD minutes/average LIS/month    57.7    50.7    49.0    -3.3%    -15.1% 
Fixed-mobile minutes/average LIS/month    39.3    35.0    33.7    -3.7%    -14.1% 
     
Gross revenue (Fixed Line)/average LIS/month (R$)   106.4    100.8    98.3    -2.5%    -7.6% 
EBITDA/average LIS/month (R$)   29.0    28.8    28.6    -0.7%    -1.3% 
Net earnings/average LIS/month (R$)   2.4    1.2    3.7    215.2%    52.7% 
     
 
     
PROFITABILITY    2Q05    1Q06    2Q06    D Quarter    D 12 Months 
     
EBITDA margin    32.8%    33.3%    33.2%    -0.1 p.p.    0.4 p.p. 
     
Net margin    2.7%    1.4%    4.3%    2.9 p.p.    1.6 p.p. 
     
Return on equity - ROE    1.2%    0.6%    2.0%    1.4 p.p.    0.8 p.p. 
     
 
     
CAPITAL STRUCTURE    2Q05    1Q06    2Q06    D Quarter    D 12 Months 
     
Cash and cash equivalents (R$ million)   1,776    1,865    2,035    9.1%    14.6% 
     
Total debt (R$ million)   5,001    4,339    4,252    -2.0%    -15.0% 
   Short term debt    23.2%    29.0%    30.7%    1.7 p.p.    7.5 p.p. 
   Long term debt    76.8%    71.0%    69.3%    -1.7 p.p.    -7.5 p.p. 
     
Net debt (R$ million)   3,225    2,474    2,217    -10.4%    -31.2% 
     
Shareholders' equity (R$ million)   5,737    5,280    5,199    -1.5%    -9.4% 
     
Net debt/shareholders' equity    56.2%    46.9%    42.6%    -4.2 p.p.    -13.6 p.p. 
     

Brasil Telecom Participações S.A.    Página 24 de 27 

BRASIL TELECOM MOBILE

Annex XVII: Income Statement

     
R$ Million    2Q05    1Q06    2Q06    D Quarter    D 12 Months 
     
GROSS REVENUES    211.0    329.5    374.7    13.7%    77.6% 
     Subscription    44.3    57.8    65.0    12.4%    46.9% 
     Utilization    29.8    85.9    95.9    11.7%    221.5% 
     Interconnection    67.9    104.6    105.9    1.3%    56.0% 
     Other Revenues    0.9    9.6    9.5    -1.3%    N.A. 
     Data Transmission    1.3    16.8    28.9    71.6%    N.A. 
     Merchandise Sales (Handsets and Accessories)   66.7    54.6    69.5    27.1%    4.1% 
Deductions    (59.8)   (106.9)   (124.2)   16.2%    107.7% 
NET REVENUES    151.2    222.6    250.5    12.6%    65.7% 
     
COSTS & OPERATING EXPENSES    (309.0)   (262.9)   (298.5)   13.5%    -3.4% 
     Personnel    (22.7)   (21.4)   (16.7)   -22.1%    -26.4% 
     Materials    (94.5)   (60.8)   (81.8)   34.4%    -13.5% 
     Subcontracted Services    (80.4)   (85.5)   (98.9)   15.7%    23.0% 
     Interconnection    (30.3)   (24.2)   (15.3)   -37.0%    -49.6% 
     Advertising and Marketing    (28.1)   (7.6)   (20.2)   165.7%    -28.3% 
     Provisions and Losses    (8.7)   (11.0)   (6.5)   -41.2%    -25.4% 
     Other    (44.4)   (52.3)   (59.2)   13.1%    33.4% 
     
EBITDA    (157.9)   (40.3)   (47.9)   18.9%    -69.6% 
EBITDA Margin    -104.4%    -18.1%    -19.1%    -1.0 p.p.    85.3 p.p. 
Depreciation and Amortization    (59.1)   (76.7)   (79.8)   4.0%    35.2% 
     
OPERATING PROFIT BEFORE FINANCIAL RESULT    (216.9)   (117.1)   (127.7)   9.1%    -41.1% 
     
Financial Result    (5.1)   (8.7)   (10.4)   20.0%    105.3% 
     Financial Revenues    10.7    5.2    1.7    -66.9%    -84.0% 
     Financial Expenses    (15.7)   (13.8)   (12.1)   -12.4%    -23.1% 
     
 
OPERATING PROFIT AFTER FINANCIAL RESULT    (222.0)   (125.7)   (138.2)   9.9%    -37.8% 
     
Non-Operating Revenues (Expenses)   (0.1)   (0.4)   (0.0)   -87.7%    -39.1% 
     
EARNINGS BEFORE INCOME AND SOCIAL                     
CONTRIBUTION TAXES    (222.1)   (126.1)   (138.2)   9.6%    -37.8% 
     
Income and Social Contribution Taxes    57.3    42.6    46.9    10.0%    -18.1% 
     
EARNINGS BEFORE PROFIT SHARING    (164.8)   (83.5)   (91.3)   9.4%    -44.6% 
     
EARNINGS BEFORE REVERSION OF INTEREST ON    (164.8)   (83.5)   (91.3)   9.4%    -44.6% 
SHAREHOLDERS' EQUITY                     
     
NET EARNINGS (LOSSES)   (164.8)   (83.5)   (91.3)   9.4%    -44.6% 
     

Obs.: The values presented in this Income Statement do not consider inter-company elimination with Brasil Telecom S.A.

Brasil Telecom Participações S.A.    Página 25 de 27 

Annex XVIII: ARPU Calculation – Mobile Telephony

   
R$ Thousands    2Q05    3Q05    4Q05    1Q06    2Q06 
   
(+) Gross Revenues    211.0    255.3    340.4    329.5    374.7 
(-) Handsets    (66.7)   (69.4)   (115.8)   (54.6)   (69.5)
Gross Service Revenues    144.3    185.9    224.6    274.8    305.3 
(-) Taxes and Deductions    (39.2)   (57.2)   (69.2)   (87.4)   (102.3)
Net Service Revenues    105.1    128.8    155.4    187.4    203.0 
(-) Net Revs Public Payphones + Roaming    (8.3)   (0.9)   (1.4)   (0.9)   (0.8)
Quarterly Net Revenues    96.8    127.8    154.0    186.4    202.2 
Monthly Net Revenues    32.3    42.6    51.3    62.1    67.4 
Average Number of Clients    1,180.5    1,504.1    1,889.5    2,340.5    2,589.7 
ARPU (R$)   27.3    28.3    27.2    26.6    26.0 
   

Annex XIX: Operating Data

     
Key Operational Data    2Q05    1Q06    2Q06    D Quarter   D 12 Months 
     
Clients    1,345.1    2,460.9    2,771.8    12.6%    106.1% 
 Post-Paid    356.6    821.1    900.2    9.6%    152.4% 
 Pre-Paid    988.5    1,639.8    1,871.6    14.1%    89.3% 
Net Additions    341.5    248.1    310.9    25.3%    -9.0% 
 Post-Paid    34.1    128.1    79.1    -38.3%    131.8% 
 Pre-Paid    307.4    119.9    231.8    93.3%    -24.6% 
Gross Additions    407.2    398.9    515.3    29.2%    26.5% 
 Post-Paid    47.3    151.6    106.7    -29.7%    125.5% 
 Pre-Paid    359.9    247.3    408.6    65.2%    13.5% 
Cancellations    65.7    150.9    204.4    35.5%    211% 
 Post-Paid    13.2    23.5    27.6    17.5%    109.1% 
 Pre-Paid    52.5    127.4    176.8    38.8%    236.8% 
Annualized Churn    22.4%    25.8%    31.3%    0.2 p.p.    0.4 p.p. 
 Post-Paid    15.5%    12.4%    12.8%    0.0 p.p.    -0.2 p.p. 
 Pre-Paid    25.2%    32.3%    40.3%    0.2 p.p.    0.6 p.p. 
SAC    240.1    136.6    152.0    11.3%    -36.7% 
Market Share    5.9%    9.4%    10.7%    0.1 p.p.    0.8 p.p. 
Served Localities    766    782    796    1.8%    3.9% 
% of Population Covered    85%    86%    87%    0.0 p.p.    0.0 p.p. 
Base Stations    1,881    2,123    2,147    1.1%    14.1% 
Switches    6    8    9    12.5%    50.0% 
Employees    937    735    632    -14.0%    -32.6% 
     

Brasil Telecom Participações S.A.    Página 26 de 27 

GLOSSARY

ADSL: Asymmetrical Digital Subscriber Line. System that allows broadband signal transmission through metallic telephone cables. It is the most common DSL technology, which represents a midway transition to totally optic networks.

ARPU: Average Revenue Per User. It is an indicator used in telecom industry which calculates the average revenue per user.

CAPEX: Capital Expenditure. The investments made by a company.

EBITDA: Earnings Before Interests, Taxes, Depreciation and Amortization.

GSM: Global System for Mobile communications. GSM is the most used technological standard by mobile operators in the world. This feature allows its users to move around freely and easily with their handsets. The price of GSM handsets is also more attractive, the network is safer and there is a consistent technological evolution.

JSCP (Interest on Shareholders’ Equity): Shareholder remuneration option, calculated from the Shareholders’ Equity and limited, for taxes deductibility effects, to the variation of the long term interest rates. The fiscal benefit is due to the reduction of the calculation basis of the income tax and social contribution on the net income, once the interest on shareholders’ equity represent deductible expenses in the application of these resources.

LIS: Lines in Service. All the lines in a plant that are effectively being used.

SAC: Subscriber Acquisition Cost. It is the average amount spent by a company to acquire a new subscriber. TUP (Public Phone): Public terminals which use phone cards (or collect calls) to make calls. Financial Leverage Ratio: Net Debt / Shareholders’ Equity

This document contains forward-looking statements. Such statements do not constitute facts occurred in the past and reflect the expectations of the Company's managers only. The words "anticipates," "believes," "estimates," "expects," "forecasts," "intends," "plans," "predicts," "projects" and "aims", as well as other similar words, are intended to identify those forward-looking statements, which obviously involve risks or uncertainties predicted or not by the Company. Accordingly, the future results of the Company’s operations may differ from the current expectations, and the reader should not rely exclusively on these forward-looking statements. Forward-looking statements speak only as 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 
 

Brasil Telecom Participações S.A.    Página 27 de 27 

 
SIGNATURE
 
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: August 01, 2006

 
BRASIL TELECOM PARTICIPAÇÕES S.A.
By:
/S/ Charles Laganá Putz
 
Name:   Charles Laganá Putz
Title:     Chief Financial Officer