Provided by MZ Data Products
 
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 July 31, 2007

(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 Participações S.A. 

BRASIL TELECOM ANNOUNCES GROSS REVENUE OF R$ 4.0 BILLION AND
EBITDA OF R$ 972.7 MILLION IN THE 2Q07

Net Revenues grew 11.9% and EBITDA grew 19.6% in comparison to the 2Q06
Net Income of R$145.5 million, 38.5% higher than in the 2Q06

Brasília, July 31, 2007 - Brasil Telecom Participações S.A. (BOVESPA: BRTP3/BRTP4; NYSE: BRP) announces its consolidated results for the second quarter of 2007 (2Q07). The Company’s unaudited financial statements are presented in million of Reais, except where stated otherwise, and prepared in conformity with generally accepted accounting principles in Brazil.

HIGHLIGHTS

     
IR CONTACTS     
     
Paulo Narcélio (Head of IR) Phone: (55 61) 3415-1140  ri@brasiltelecom.com.br 
Flávia Menezes (IR Manager) Phone: (55 61) 3415-1256  flavia@brasiltelecom.com.br 
Reynaldo Abreu Filho  Phone: (55 61) 3415-1411  reynaldom@brasiltelecom.com.br 
Maria Lúcia Rocha  Phone: (55 61) 3415-1291  malu@brasiltelecom.com.br 
     
MEDIA CONTACTS     
     
Rui Xavier (Director) Phone: (55 61) 3415-9657  rui@brasiltelecom.com.br 
César Borges (Manager) Phone: (55 61) 3415-1378  cesarb@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).

Brasil Telecom Participações S.A.    Page 1 of 30 

INCOME STATEMENT

BRASIL TELECOM PARTICIPAÇÕES S.A.

R$ Million    2Q06  1Q07  2Q07    D Quarter   D 12 Months   6M06  6M07    D Year 
GROSS REVENUES    3,619.3  3,897.1  3,972.9    1.9%  9.8%    7,274.2  7,869.9    8.2% 
                 
FIXED TELEPHONY    2,796.3  2,824.4  2,775.3    -1.7%  -0.7%    5,685.1  5,599.7    -1.5% 
     Local Service    1,702.2  1,648.0  1,634.4    -0.8%  -4.0%    3,471.3  3,282.5    -5.4% 
     Public Telephony    138.8  129.0  140.4    8.8%  1.1%    266.6  269.4    1.0% 
     Long Distance Service    678.5  756.3  727.6    -3.8%  7.2%    1,382.3  1,483.9    7.3% 
     Interconnection    99.7  85.0  82.4    -3.0%  -17.4%    208.2  167.4    -19.6% 
     Lease of Means    80.0  89.7  86.0    -4.1%  7.5%    163.0  175.8    7.8% 
     Supplementary and Value Added Services    86.8  106.3  95.9    -9.8%  10.5%    172.9  202.2    16.9% 
     Other    10.2  10.0  8.6    -13.8%  -15.9%    20.7  18.6    -10.0% 
MOBILE TELEPHONY *    289.3  429.7  511.5    19.0%  76.8%    533.7  941.2    76.3% 
DATA COMMUNICATIONS    533.7  642.9  686.0    6.7%  28.5%    1,055.3  1,329.0    25.9% 
                 
Deductions    (1,168.6) (1,206.2) (1,229.5)   1.9%  5.2%    (2,346.6) (2,435.7)   3.8% 
NET REVENUES    2,450.7  2,690.9  2,743.3    2.0%  11.9%    4,927.6  5,434.2    10.3% 
                 
OPERATING COSTS AND EXPENSES    (1,637.2) (1,738.9) (1,770.7)   1.8%  8.2%    (3,288.8) (3,509.6)   6.7% 
     Personnel    (162.7) (151.3) (156.2)   3.2%  -4.0%    (352.9) (307.5)   -12.9% 
     Materials    (105.2) (77.3) (101.7)   31.6%  -3.3%    (189.1) (179.0)   -5.3% 
     Subcontracted Services    (575.2) (564.5) (562.4)   -0.4%  -2.2%    (1,119.1) (1,126.9)   0.7% 
     Interconnection    (480.6) (576.5) (570.4)   -1.1%  18.7%    (979.1) (1,147.0)   17.1% 
     Advertising and Marketing    (42.2) (24.8) (35.6)   43.4%  -15.8%    (62.6) (60.3)   -3.6% 
     Provisions and Losses    (224.7) (218.3) (271.6)   24.4%  20.9%    (412.6) (489.9)   18.7% 
     Other    (46.7) (126.2) (72.7)   -42.4%  55.8%    (173.3) (198.9)   14.8% 
                 
EBITDA    813.6  952.0  972.7    2.2%  19.6%    1,638.9  1,924.6    17.4% 
EBITDA Margin    33.2%  35.4%  35.5%    0.1 p.p.  2.3 p.p.    33.3%  35.4%    2.2 p.p. 
Depreciation and Amortization    (669.3) (650.1) (626.6)   -3.6%  -6.4%    (1,339.3) (1,276.7)   -4.7% 
                 
 
EARNINGS BEFORE FINANCIAL RESULT (EBIT)   144.3  301.9  346.1    14.6%  139.8%    299.5  648.0    116.3% 
 
                 
Financial Result    (299.2) (333.3) (16.6)   -95.0%  -94.5%    (374.5) (349.9)   -6.5% 
     Financial Revenues    193.7  161.4  144.0    -10.8%  -25.7%    309.8  305.4    -1.4% 
     Financial Expenses    (227.4) (227.0) (160.6)   -29.3%  -29.4%    (418.8) (387.6)   -7.5% 
     Interest on Own Capital    (265.5) (267.8) -    N.A.  N.A.    (265.5) (267.8)   0.9% 
                 
 
EARNINGS AFTER FINANCIAL RESULT    (154.9) (31.4) 329.5    N.A.  N.A.    (74.9) 298.0    N.A. 
 
                 
Non-Operating Revenues (Expenses)   (14.3) 3.5  2.7    -22.7%  N.A.    (16.9) 6.1    N.A. 
     Goodwill Amortization    (0.3) (0.1) (0.0)   -96.1%  -98.2%    (0.5) (0.1)   -75.3% 
     Other    (14.1) 3.6  2.7    -25.2%  N.A.    (16.4) 6.3    N.A. 
                 
EARNINGS BEFORE INCOME AND SOCIAL CONTRIBUTION TAXES    (169.2) (28.0) 332.1    N.A.  N.A.    (91.8) 304.2    N.A. 
                 
Income and Social Contribution Taxes    47.3  0.0  (129.0)   N.A.  N.A.    5.2  (128.9)   N.A. 
                 
EARNINGS BEFORE PROFIT SHARING    (121.9) (27.9) 203.2    N.A.  N.A.    (86.6) 175.2    N.A. 
                 
Minority Interest    (38.5) (70.0) (57.7)   -17.5%  49.8%    (40.3) (127.7)   216.6% 
                 
EARNINGS BEFORE REVERSION OF INTEREST ON OWN CAPITAL    (160.5) (97.9) 145.5    N.A.  N.A.    (126.9) 47.6    N.A. 
                 
Reversion of Interest on Own Capital    265.5  267.8  -    N.A.  N.A.    265.5  267.8    0.9% 
                 
NET INCOME    105.0  169.9  145.5    -14.4%  38.5%    138.5  315.3    127.6% 
                 
 
                 
Net Income/shares - R$ **    0.2897  0.4686  0.4013    -14.4%  38.5%    0.4243  0.9658    N.A. 
Net Income/ADR - US$    0.6692  1.1430  1.0417    -8.9%  55.7%    0.9803  2.5071    N.A. 
                 
*      Data communications revenues (VAS) are included in "Mobile Telephony" item.
**      The values of 2Q06 and 1Q07 are per 1,000 shares.
 
Brasil Telecom Participações S.A.    Page 2 of 30 

BRT MOBILE

R$ Million    2Q06  1Q07  2Q07    D Quarter D 12 Months    6M06  6M07     Year 
GROSS REVENUES    374.7   541.3   609.1    12.5%  62.6%    704.2  1,150.4    63.4% 
       Subscription    65.0   101.4   113.7    12.1%  74.9%    122.9  215.1    75.1% 
       Utilization    95.9   121.5   128.7    5.9%  34.2%    181.9  250.2    37.6% 
       Interconnection    105.9   239.1   246.5    3.1%  132.7%    210.5  485.6    130.7% 
       Other Revenues    9.5  9.8  11.3    15.2%  19.2%    19.1  21.1    10.6% 
       Data Communications    28.9  17.2  26.2    52.3%  -9.3%    45.7  43.4    -5.1% 
       Merchandise Sales (Handsets and Accessories)   69.5  52.2  82.7    58.4%  19.0%    124.1  134.9    8.7% 
Deductions    (124.2) (156.3) (179.6)   14.9%  44.6%    (231.1) (335.9)   45.4% 
NET REVENUES    250.5   385.0   429.6    11.6%  71.5%    473.1  814.5    72.2% 
                 
OPERATING COSTS AND EXPENSES    (298.5) (380.6) (424.4)   11.5%  42.2%    (561.4) (805.0)   43.4% 
       Personnel    (16.7) (18.7) (17.8)   -4.4%  6.9%    (38.1) (36.5)   -4.2% 
       Materials    (81.8) (55.9) (78.8)   40.8%  -3.7%    (142.6) (134.7)   -5.5% 
       Subcontracted Services    (98.9) (93.7) (90.6)   -3.3%  -8.4%    (184.4) (184.4)   0.0% 
       Interconnection    (15.3) (128.0) (146.6)   14.6%  N.A.    (39.5) (274.6)   N.A. 
       Advertising and Marketing    (20.2) (10.2) (17.2)   69.0%  -14.7%    (27.7) (27.4)   -1.4% 
       Provisions and Losses    (6.5) (14.6) (20.5)   39.9%  215.8%    (17.5) (35.1)   100.6% 
       Other    (59.2) (59.4) (52.9)   -11.1%  -10.7%    (111.5) (112.3)   0.7% 
                 
EBITDA    (47.9) 4.4  5.2    18.9%  N.A.    (88.2) 9.6    N.A. 
EBITDA Margin    -19.1%  1.1%  1.2%    0.1 p.p.  N.A.    -18.7%  1.2%    N.A. 
       Depreciation and Amortization    (79.8) (94.5) (95.2)   0.7%  19.3%    (156.6) (189.7)   21.2% 
                 
 
EARNINGS BEFORE FINANCIAL RESULT    (127.7) (90.2) (90.0)   -0.1%  -29.5%    (244.8) (180.2)   -26.4% 
 
                 
       Financial Result    (10.4) 10.6  17.2    62.1%  N.A.    (19.1) 27.8    -245.7% 
               Financial Revenues    1.7  22.7  25.8    13.9%  N.A.    6.9  48.5    606.1% 
               Financial Expenses    (12.1) (12.1) (8.6)   -28.4%  -28.7%    (25.9) (20.7)   -20.2% 
                 
 
EARNINGS AFTER FINANCIAL RESULT    (138.2) (79.5) (72.8)   -8.4%  -47.3%    (263.9) (152.4)   -42.3% 
 
                 
       Non-Operating Revenues (Expenses)   (0.0) -  1.3    N.A.  N.A.    (0.4) 1.3    N.A. 
                 
EARNINGS BEFORE INCOME AND SOCIAL    (138.2) (79.5) (71.6)   -10.0%  -48.2%    (264.3) (151.1)   -42.8% 
CONTRIBUION TAXES                         
                 
       Income and Social Contribution Taxes    46.9  27.1  23.7    -12.6%  -49.5%    89.5  50.8    -43.3% 
                 
 
EARNINGS BEFORE PROFIT SHARING    (91.3) (52.5) (47.9)   -8.7%  -47.5%    (174.8) (100.4)   -42.6% 
 
                 
EARNINGS BEFORE REVERSION OF INTEREST ON OWN CAPITAL    (91.3) (52.5) (47.9)   -8.7%  -47.5%    (174.8) (100.4)   -42.6% 
                 
NET EARNINGS (LOSSES)   (91.3) (52.5) (47.9)   -8.7%  -47.5%    (174.8) (100.4)   -42.6% 
                 

Brasil Telecom Participações S.A.    Page 3 of 30 

OPERATING PERFORMANCE

WIRELINE TELEPHONY

Network

Table 1: Operating Data

FIXED LINE PLANT     2Q06  1Q07  2Q07    D Quarter D 12 Months 
Lines Installed (Thousand)   10,794.5  10,388.5  10,375.2    -0.1%  -3.9% 
Additional Lines Installed (Thousand)   (19.8) (34.5) (13.3)   -61.4%  -32.8% 
           
Lines in Service - LIS (Thousand)   9,407.1  8,278.0  8,129.4    -1.8%  -13.6% 
             Residential    5,939.9  5,560.3  5,470.3    -1.6%  -7.9% 
             Non-Residential    1,401.4  1,248.7  1,238.5    -0.8%  -11.6% 
             Public Telephones    290.7  275.5  276.0    0.2%  -5.0% 
             Pre-paid    316.1  -  -    N.A.  -100.0% 
             Hybrid Terminals    819.3  561.8  507.7    -9.6%  -38.0% 
             Other (Including PBX)   639.6  631.8  636.9    0.8%  -0.4% 
Additional LIS (Thousand)   (136.0) (139.6) (148.6)   6.4%  9.3% 
           
Active Lines (LIS - Blocked Lines)   8,341.4  8,037.0  7,901.5    -1.7%  -5.3% 
           
Blocked Lines    1,065.7  241.1  227.9    -5.5%  -78.6% 
           
Average LIS (Thousand)   9,475.1  8,347.8  8,203.7    -1.7%  -13.4% 
           
LIS/100 Inhabitants    21.8  18.8  18.4    -2.1%  -15.5% 
Public Telephones/1,000 Inhabitants    6.7  6.3  6.3    -0.1%  -7.1% 
Public Phones/100 Lines Installed    2.7  2.7  2.7    0.3%  -1.2% 
           
Utilization Rate    87.1%  79.7%  78.4%    -1.3 p.p.  -8.8 p.p. 
           
Digitalization Rate    100.0%  100.0%  100.0%    0.0 p.p.  0.0 p.p. 
           

At the end of the 2Q07, Brasil Telecom’s network had 8.1 million lines in service, 41.0% of which were clients from alternative plans. Following the strategy of segmenting the client base to guarantee universal access to telecom services and the profitability of the services rendered, Brasil Telecom has been launching new plans. In compliance with Anatel resolutions, the implementation of the conversion from pulses to minutes will be concluded by July 31, 2007.

Brasil Telecom offers its clients the Full Bill Plan (Plano Conta Completa), already adapted to the new minute-based charging system determined by Anatel, allowing clients to receive a detailed bill and identify the calls made. The Complete Bill Plan packages allow clients to choose the plan that best suits their consumption profile, with plan options ranging from 400 to 20,000 minutes in local calls to fixed lines, from 30 to 500 minutes in local calls to mobile lines, and from 30 to 120 minutes in long-distance calls.

Brasil Telecom had 3.3 million lines in alternative wireline telephony plans, 19.2% more than in the 2Q06, as a result of the company’s strategy to retain clients and cement client loyalty by offering specific plans according to the profile of each client. Alternative plans include minute plans and plans for fixed-to-fixed and fixed-to-mobile local calls.

Brasil Telecom also offers alternative long-distance call plans and had 682.7 clients at the end of the 2Q07, an increase of 62.1% on the 2Q06.

Brasil Telecom Participações S.A.    Page 4 of 30 

Graph 1: Alternative Local Plans – Wireline Telephony

At the end of the 2Q07, Brasil Telecom’s network comprised 10.4 million installed lines, 8.1 million of which in service, leading to a utilization rate of 78.4% . The utilization rate declined 8.8 p.p. due to the adoption of stricter measures in the Company’s collection and charging policy as of the 3Q06 and the decline in fixed lines in service. At the close of the 2Q07, Brasil Telecom had 7,901.5 thousand active lines and 227.9 thousand blocked lines.

Traffic

Table 2 : Traffic

TRAFFIC    2Q06  1Q07  2Q07    D Quarter   D 12 Months   6M06  6M07    D Year 
Exceeding Local Pulses (Million) *    2,142.2  1,433.8  1,216.9    -15.1%  -43.2%    4,433.4  2,650.7    -40.2% 
                 
Exceeding Minutes (Million)   -  114.2  499.7    337.5%  N.A.    -  614.0    N.A. 
                 
VC-1 (Million Minutes)   699.9  692.3  697.8    0.8%  -0.3%    1,444.6  1,390.1    -3.8% 
                 
Lond Distance Minutes (Million)   1,395.4  1,438.4  1,381.7    -3.9%  -1.0%    2,849.5  2,820.1    -1.0% 
                 
         Long Distance    1,136.4  1,128.3  1,061.3    -5.9%  -6.6%    2,332.9  2,189.6    -6.1% 
         VC-2    159.5  168.1  174.6    3.9%  9.5%    312.2  342.7    9.8% 
         VC-3    99.5  141.9  145.8    2.7%  46.6%    204.4  287.7    40.8% 
                 
* Reclassified in 1Q07 for a better comparison. 

Brasil Telecom recorded 499.7 million in billed minutes, 337.5% higher than the 114.2 million recorded in the 1Q07, chiefly due to the growing adherence to alternative plans.

Brasil Telecom Participações S.A.    Page 5 of 30 

Brasil Telecom recorded 1.2 billion billed pulses, down 15.1% on the 1Q07, due to the migration from billed pulses to billed minutes in the 2Q07. Compared to the same period the year before, the decline was 43.2%, due to: the increase in local plans, which generated higher subscriptions; the effect of the migration from pulses to minutes, which distributes traffic formerly measured only by pulses and that as of this year began to be measured also in minutes; the 25.9% increase in ADSL users; and the migration from fixed to mobile terminals VC-1 traffic totaled 697.8 million, 0.8% higher than in the 1Q07 and in line with the 2Q06, despite the aggressive promotions for intra-network calls from the competing mobile operators.

Long-distance traffic fell 3.9% and 1.0% on the 1Q07 and the 2Q06, respectively. However, this decline was offset in the revenue line by the growth in the number of clients adhering to long-distance plans. In addition, there was also an increase in VC-2 and VC-3 traffic, as shown below in the comparisons with the previous quarter and with the same period of last year.

Graph 2: LD Market Share – Quarterly Average – BrT Estimate


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

In the 2Q07, Brasil Telecom maintained its leadership position and recorded average market share in the quarter of 86.0% in the intra-regional segment. In the intra-sector segment, Brasil Telecom’s market share was 90.5%, in line with the previous quarter. Brasil Telecom closed the 2Q07 with market share of 63.7% and 36.0% in the inter-regional and international segments, respectively.

Brasil Telecom Participações S.A.    Page 6 of 30 

TARIFFS

Brasil Telecom was authorized by Anatel to adjust the tariff items in the Basic Plans for Local Service and Domestic Long-Distance Service, pursuant to the Concession Agreements. The adjustments authorized for the local and domestic long-distance plans averaged 2.14% . The TU-RL (Local Network Usage Tariff) was adjusted upward by 2.14% while the TU-RIU (Interstate Network Usage Tariff) was adjusted downward by 0.13% .

The tariffs for the STFC (Switched Fixed Telephony Service), Local and DLD Basic Plans for calls involving mobile phones (VC-1, VC-2 and VC-3) were adjusted upward by 3.29%, also as of July 20, 2007.

Table 3 : Local Service Rates (in R$)

   Maximum Values 
Local Service1  Effective since  Effective since 
  7/14/2006  7/20/2007 
Installation Fee  32.39  33.08 
Residencial Monthly Fee  27.28  27.86 
Non-residential Monthly Fee  40.36  41.23 
PBX Monthly Fee  39.98  40.85 
Local Pulse  0.10996  0.11230 
Address Change  32.39  33.08 
Public Telephone Credit  0.11600  0.11850 
     
1 Tariffs net of taxes, except for the Public Telephone Credit.

Table 4: Long-Distance Service Rates (in R$)

DLD Service1 Effective since 7/21/2006 
Normal  Differentiated  Reduced  Super Reduced 
D1  0.12796  0.22304  0.06394  0.03194 
D2  0.21330  0.30978  0.10660  0.05326 
D3  0.23816  0.34901  0.15994  0.07994 
D4  0.24574  0.35594  0.19761  0.10660 
         

 DLD Service1 Effective since 7/20/2007 
Normal  Differentiated  Reduced  Super Reduced 
D1  0.13819  0.24088  0.06905  0.03449 
D2  0.23036  0.33365  0.11512  0.05752 
D3  0.23668  0.34618  0.16870  0.08633 
D4  0.24472  0.35502  0.19970  0.11512 
         
1 Tariffs net of taxes, average, per minute, for calls between fixed terminals.

DLD Service2  Adjustment Percentage Change2  
Normal  Differentiated  Reduced  Super Reduced 
D1  8.00%  8.00%  7.99%  7.98% 
D2  8.00%  7.71%  7.99%  8.00% 
D3  -0.62%  -0.81%  5.47%  7.99% 
D4  -0.41%  -0.26%  1.05%  7.99% 
         
2 The percentage of average DLD adjustment was 2.1385%

Brasil Telecom Participações S.A.    Page 7 of 30 

Table 5: Network Usage Rates (in R$)

Network Usage Previous  Previous  Adjusted 
 Tariff 1 4  Tariff 2 4  Tariff 3 4
TU-RL  0.03663  0.02930  0.02992 
TU-RIU  0.08110  0.08311  0.08301 
       
1 Tariff effective since July, 2006.
2 Tariff effective since January, 2007.
3 Tariff effective sinde July, 2007.
4 Tariffs net of taxes.

MOBILE TELEPHONY

Table 6: Operating Data

Key Operational Data    2Q06  1Q07  2Q07    D Quarter D 12 Months 
Clients (Thousand)   2,771.8  3,638.1  3,768.6    3.6%  36.0% 
   Post-Paid    900.2  967.0  890.2    -7.9%  -1.1% 
   Pre-Paid    1,871.6  2,671.1  2,878.3    7.8%  53.8% 
Net Additions (Thousand)   310.9  261.3  130.5    -50.1%  -58.0% 
   Post-Paid    79.1  (26.9) (76.7)   185.7%  -197.1% 
   Pre-Paid    231.8  288.2  207.2    -28.1%  -10.6% 
Gross Additions (Thousand)   515.3  447.2  623.5    39.4%  21.0% 
   Post-Paid    106.7  65.0  98.6    51.7%  -7.6% 
   Pre-Paid    408.6  382.2  524.9    37.3%  28.5% 
Cancellations (Thousand)   204.4  185.9  493.0    165%  141% 
   Post-Paid    27.6  91.8  175.3    90.9%  535.3% 
   Pre-Paid    176.8  94.1  317.7    237.8%  79.7% 
Annualized Churn    31.3%  21.2%  53.3%    32.1 p.p.  22.0 p.p. 
   Post-Paid    12.8%  37.5%  75.5%    38.0 p.p.  62.7 p.p. 
   Pre-Paid    40.3%  14.9%  45.8%    30.9 p.p.  5.5 p.p. 
SAC (R$)   152.0  97.8  89.7    -8.3%  -41.0% 
Market Share    10.7%  12.9%  12.9%    0.0 p.p.  2.2 p.p. 
Served Localities    796  830  830    0.0%  4.3% 
% of Population Covered    87%  87%  87%    0.0 p.p.  0.0 p.p. 
Base Stations    2,147  2,417  2,434    0.7%  13.4% 
Switches    9  10  10    0.0%  11.1% 
Employees    632  611  610    -0.2%  -3.5% 
           

BrT Mobile`s users in service rose to 3,768.6 thousand, representing a net addition of 130.5 thousand users in the 2Q07. At the end of the 2Q07, BrT Mobile`s client portfolio was 3.6% larger than in the 1Q07 and 36.0% larger than in the 2Q06.

Brasil Telecom Participações S.A.    Page 8 of 30 

Graph 3: Mobile Network


At the end of June 2007, BrT Mobile’s subscriber base was composed of 890.2 thousand postpaid subscribers (23.6% of total subscribers) and 2,878.3 thousand prepaid subscribers.

On June 30, Brasil Telecom identified and disconnected 181.3 thousand inactive users that did generate revenue for the company. Of the total removed in June 2007, 95.3 thousand were postpaid and 86.0 thousand were prepaid.

These non-recurring disconnections led to negative postpaid net additions. However, total net additions were positive by 130.5 thousand due to the high sales volume in the 2Q07, fueled by Mother’s Day.

Gross additions in the quarter reached 623.5 thousand, increases of 39.4% versus the 1Q07 and of 21.0% against 2Q06, respectively. The result reflects the success of the Mothers’ Day sales campaign, boosted by the “talk for free at night” (Fale de Graça à Noite) promotion, through which Brasil Telecom seeks to offer new benefits to customers without entailing new costs. In addition to attracting new users, BrT increases network usage at times when optimum-capacity is not achieved.

BrT Mobile’s market share in Region II came to 12.9% by the end of the 2Q07, in line with the figure for the 1Q07 and 2.2 p.p. above that in 2Q06. BrT Mobile remained in third place in terms of market share in the states of GO, TO, MT, AC and RO and the Federal District.

According to Anatel, BrT Mobile’s postpaid user market share in Region II was 15.4% in June, exceeding total user market share (12.9%) .

In the 2Q07, BrT Mobile covered 830 locations, serving 87% of the population in Region II.

Brasil Telecom Participações S.A.    Page 9 of 30 

DATA

Graph 4: ADSL Accesses


Brasil Telecom added 69.9 thousand ADSL users to its network during the 2Q07, bringing ADSL users in service to 1,453.4 thousand by end June 2007, for growth of 5.1% and 25.9% over the 1Q07 and the 2Q06, respectively. ADSL penetration (ADSL/LIS) reached 17.9% in the 2Q07, versus 16.7% in the 1Q07 and 12.3% in the 2Q06.

The continued growth in ADSL services was sustained during the 2Q07, supported by the sale of quadruple-play packages in partnership with Sky and the expansion of the Turbo services portfolio, which employs ADSL 2+ technology and allows speed of up to 24 Mbps. Brasil Telecom has been investing in this technology over the past few years and it is already available in more than half of the 1,300 cities served by broadband, providing clients with access to new services, such as IPTV, which is already in a pilot commercial operation in the Federal District of Brasília, with the commercial launch expected in the coming months.

Brasil Telecom also recorded continued growth in other products in the data communications segment, such as: (i) Serviço Plus, a data transport service; (ii) Vetor, a private virtual network which uses all the capacity of IP connections to form a unique, complete and flexible network, used for data, multimedia and voice transmission; (iii) IP Corporate services, an Internet connectivity service for large companies; and (iv) Interlan, a solution to connect more than two points to a concentrating spot, transmitting voice and data.

Brasil Telecom Participações S.A.    Page 10 of 30 

Internet Service Providers

Internet Group, Brasil Telecom’s Internet unit, which comprises the activities of the providers iG, iBest and BrTurbo, is the second largest broadband provider in the Brazilian market. Combined with the Value-Added Services, the total number of paying clients is 1.8 million. Internet Group also has 4 million dial-up users, and is the third largest Brazilian portal in terms of audience, with more than 9.8 million residential unique visitors per month.

Internet Group had 1.3 million broadband clients at the end of the 2Q07, up by 7.9% and 42.3% on the 1Q07 and 2Q06, respectively. It is estimated that 64.1% of all broadband clients in Region II subscribe to iG or BrTurbo, positioning the company as the market leader in that region.

Internet Group also experienced an increase of 27.9% and 173.4% in the number of Value-Added Service clients over the 1Q07 and 2Q06, respectively, reaching 0.6 million clients in the 2Q07. This upturn was led by products aimed at the residential market, especially: Protégé, an online anti-virus; Resolve, providing 24/7 technical telephone support; and Educa, a content product focused on family education.

The traffic generated by the 4 million dial-up clients came to 12.3 billion minutes in the 2Q07, 18.5% higher than in the same period a year ago. The market share in terms of minutes of iBest and iG in Region II reached 67.5% at the end of the 2Q07, positioning Internet Group as the market leader in the region.

Brasil Telecom Participações S.A.    Page 11 of 30  

FINANCIAL PERFORMANCE

REVENUE

Table 7: Consolidated Operating Gross Revenue

R$ Million     2Q06  1Q07  2Q07    D Quarter D 12 Months     6M06  6M07    D Year 
GROSS REVENUES    3,619.3  3,897.1  3,972.9    1.9%  9.8%    7,274.2  7,869.9    8.2% 
                 
FIXED TELEPHONY    2,796.3  2,824.4  2,775.3    -1.7%  -0.7%    5,685.1  5,599.7    -1.5% 
                 
 Local Service    1,702.2  1,648.0  1,634.4    -0.8%  -4.0%    3,471.3  3,282.5    -5.4% 
                 
     Subscription    871.1  862.6  874.3    1.4%  0.4%    1,764.4  1,736.9    -1.6% 
     Activation    7.5  6.6  3.7    -44.4%  -50.8%    11.6  10.3    -11.7% 
     Masured Service    336.0  302.6  281.1    -7.1%  -16.3%    691.6  583.6    -15.6% 
     VC-1    476.2  465.7  466.1    0.1%  -2.1%    979.7  931.7    -4.9% 
     Lease of Facilities    0.4  0.3  0.3    -3.8%  -32.1%    0.7  0.6    -20.9% 
     Other    11.0  10.3  9.1    -12.1%  -17.8%    23.2  19.4    -16.6% 
                 
 Public Telephony    138.8  129.0  140.4    8.8%  1.1%    266.6  269.4    1.0% 
                 
 Long Distance Service    678.5  756.3  727.6    -3.8%  7.2%    1,382.3  1,483.9    7.3% 
                 
     Intra-Sector    212.4  213.9  212.3    -0.7%  0.0%    442.4  426.2    -3.7% 
     Intra-Region    73.3  68.4  66.2    -3.3%  -9.8%    155.5  134.6    -13.4% 
     Inter-Region    63.8  60.8  61.0    0.4%  -4.2%    133.5  121.9    -8.7% 
     International    10.3  11.7  11.3    -3.8%  9.3%    23.0  23.0    0.0% 
     VC-2    180.7  202.6  190.8    -5.8%  5.6%    348.2  393.3    13.0% 
             Fixed Origin    68.4  73.7  70.7    -4.1%  3.5%    138.6  144.5    4.2% 
             Mobile Origin    112.3  128.8  120.0    -6.8%  6.9%    209.6  248.9    18.7% 
     VC-3    137.9  198.9  186.0    -6.5%  34.8%    279.6  384.9    37.7% 
             Fixed Origin    54.0  97.2  95.6    -1.6%  77.1%    112.8  192.9    70.9% 
             Mobile Origin    83.9  101.6  90.4    -11.1%  7.6%    166.8  192.0    15.1% 
     Interconnection    99.7  85.0  82.4    -3.0%  -17.4%    208.2  167.4    -19.6% 
                 
             Fixed-Fixed    66.7  56.7  54.8    -3.5%  -17.9%    138.4  111.5    -19.4% 
             Mobile-Fixed    33.0  28.2  27.6    -2.0%  -16.3%    69.8  55.9    -20.0% 
                 
     Lease of Means    80.0  89.7  86.0    -4.1%  7.5%    163.0  175.8    7.8% 
                 
     Supplementary and Value Added    86.8  106.3  95.9    -9.8%  10.5%    172.9  202.2    16.9% 
     Services                         
                 
     Other    10.2  10.0  8.6    -13.8%  -15.9%    20.7  18.6    -10.0% 
                 
MOBILE TELEPHONY    289.3  429.7  511.5    19.0%  76.8%    533.7  941.2    76.3% 
                 
         Subscription    65.0  101.4  113.7    12.1%  74.9%    122.9  215.1    75.1% 
         Utilization    89.5  109.5  128.1    17.0%  43.2%    168.8  237.6    40.7% 
         Roaming    2.4  4.8  4.2    -11.8%  74.2%    5.9  8.9    52.4% 
         Interconnection    27.0  139.6  149.4    7.0%  454.0%    53.1  289.1    444.6% 
         Other Services    6.1  3.5  5.7    61.8%  -5.7%    10.6  9.3    -13.0% 
         Comunicação de Dados    28.9  17.2  26.2    52.3%  -9.3%    45.7  43.4    -5.1% 
         Merchandise Sales    69.5  52.2  82.7    58.4%  19.0%    124.1  134.9    8.7% 
                 
DATA COMMUNICATIONS    533.7  642.9  686.0    6.7%  28.5%    1,055.3  1,329.0    25.9% 
                 
         Fixed    533.7  642.9  686.0    6.7%  28.5%    1,055.3  1,329.0    25.9% 
             Fixed    446.4  540.2  573.8    6.2%  28.6%    884.0  1,114.0    26.0% 
             Other Services of the Main Activity    87.3  102.7  112.2    9.2%  28.5%    171.3  214.9    25.5% 
Deductions    (1,168.6) (1,206.2) (1,229.5)   1.9%  5.2%    (2,346.6) (2,435.7)   3.8% 
% of Gross Revenue    32.3%  31.0%  30.9%    0.0 p.p.  -1.3 p.p.    32.3%  30.9%    0.0 p.p. 
                 
NET REVENUES    2,450.7  2,690.9  2,743.3    2.0%  11.9%    4,927.6  5,434.2    10.3% 
                 
 Net Service Revenues    2,403.2  2,660.2  2,694.3    1.3%  12.1%    4,844.9  5,354.4    10.5% 
 Net Handsets Revenues    47.5  30.7  49.1    59.9%  3.2%    82.7  79.8    -3.6% 
                 

Brasil Telecom’s total gross revenue was R$3,972.9 million in the 2Q07, 1.9% and 9.8% higher than in the 1Q07 and 2Q06, respectively. The increased share of data communication and mobile telephony services demonstrate the success of the strategy implemented by Brasil Telecom to diversify its revenue.

Brasil Telecom Participações S.A.    Page 12 of 30  

Graph 5: Gross Revenue Breakdown


Local service gross revenue reached R$1,634.4 million in the 2Q07, 0.8% lower than in the 1Q07. This smaller decline in local service was due to the increase in the number of clients in the local alternative plans offered by the company. Of the total local service revenue, 70.7% came from subscription and measured service revenue and 28.5% from local VC-1 calls.

Gross revenue from subscription fees totaled R$874.3 million, up 1.4% on the R$862.6 million recorded in the 1Q07, chiefly due to the migration of clients to alternative plans, offsetting the 1.7% reduction in average lines in service, which totaled 8,203.7 thousand in the 2T07, versus 8,347.8 thousand in the 1Q07.

Gross revenue from measured service totaled R$281.1 million in the 2Q07, down 7.1% on the previous quarter, chiefly due to the migration of clients to alternative plans. In comparison to 2Q06, gross revenues from measured service fell 16.3%, due to the 43.2% reduction in billed pulses, partially offset by the 377.5% increase in billed minutes.

Gross revenue from VC-1 calls was R$466.1 million in the 2Q07, in line with the figure recorded in the 1Q07, reflecting the stability in the number of VC-1 minutes.

Gross revenue from public telephony totaled R$140.4 million in the 2Q07, up 8.8% on the 1Q07 and 1.1% on the 2Q06. The increase over the 1Q07 was chiefly due to the 6.0% upturn in the number of credits sold in the 2Q07.

Gross revenue from LD calls reached R$727.6 million in the 2Q07, down 3.8% on the 1Q07, reflecting mainly the migration to the minute long distance alternative plans, pushing long-distance traffic down by 3.9% . The increase of 7.2% over the second quarter of the previous year was mainly due to the higher share of VC-2, VC-3 and international.

Interconnection revenue was R$82.4 million in the 2Q07, declining 3.0% and 17.4% over the 1Q07 and 2Q06, respectively, chiefly due to the reduction in traffic and the 20% decline in TU-RL as of January 1st, 2007.

Fixed telephony ARPU (excluding data communications) reached R$77.9 in the 2Q07, in line with the previous quarter and up by 17.0% on the figure recorded in the 2Q06, reflecting the company’s strategy of hindering the decline of the revenue from fixed telephony. Including data communications, ARPU reached R$97.9 in the 2Q07, up 1.9% and 22.5% over the 1Q07 and 2Q06, respectively, reflecting the accelerating growth in ADSL penetration.

Brasil Telecom Participações S.A.    Page 13 of 30  

Graph 6: Data Communication and Mobile Telephony Revenue


In the 2Q07, gross revenue from data communication and other services of main activity totaled R$686.0 million, up 6.7% and 28.5% on the 1Q07 and 2Q06, respectively. This increase was mainly attributable to the expansion in the ADSL client base, which grew 5.1% and 25.9% over the 1Q07 and 2Q06, respectively.

ADSL ARPU was R$72.2 in the 2Q07, 1.3% and 6.8% higher than in the 1Q07 and 2Q06, respectively, due to the strategy of prioritizing the sale of more profitable products with higher access speeds.

In the 2Q07, consolidated gross revenue from mobile telephony was 13.6% and 95.1% higher than in the 1Q07 and 2Q06, respectively. The increase over the 2Q06 was due to the effect from the full bill and the growth in the base.

In the 2Q07, consolidated gross revenue from mobile telephony totaled R$511.5 million, R$428.8 million of which from services and R$82.7 million from the sale of handsets and accessories.

Mobile telephony ARPU in the 2Q07 reached R$33.8. Postpaid ARPU totaled R$49.8 while prepaid ARPU came to R$28.3. Total ARPU edged up by 1.2% on the 1Q07.

Excluding the extraordinary disconnection of 181.3 thousand clients in June 2007, BrT Mobile ARPU would have been R$35.21, the highest among Brazilian mobile telephony operators in the 2Q07.

Brasil Telecom’s consolidated net revenue came to R$2,743.3 million in the 2Q07, 2.0% higher than in the 1Q07 and 11.9% higher than in the 2Q06.

Brasil Telecom Participações S.A.    Page 14 of 30  

COSTS AND EXPENSES

Table 8: Consolidated Operating Costs and Expenses

R$ Million     2Q06  1Q07  2Q07    D Quarter D 12 Months    6M06  6M07    D Year 
GROSS REVENUES    3,619.3  3,897.1  3,972.9    1.9%  9.8%    7,274.2  7,869.9    8.2% 
                 
Deductions    (1,168.6) (1,206.2) (1,229.5)   1.9%  5.2%    (2,346.6) (2,435.7)   3.8% 
NET REVENUES    2,450.7  2,690.9  2,743.3    2.0%  11.9%    4,927.6  5,434.2    10.3% 
                 
 Costs    (1,560.8) (1,611.4) (1,601.8)   -0.6%  2.6%    (3,128.7) (3,213.2)   2.7% 
                 
     Personnel    (45.3) (40.1) (41.8)   4.1%  -7.8%    (103.9) (81.9)   -21.2% 
     Materials    (92.8) (69.5) (89.5)   28.8%  -3.5%    (164.8) (159.0)   -3.5% 
     Subcontracted Services    (708.8) (815.2) (802.0)   -1.6%  13.2%    (1,430.7) (1,617.2)   13.0% 
         Interconnection    (480.6) (576.5) (570.4)   -1.1%  18.7%    (979.1) (1,147.0)   17.1% 
         Other    (228.2) (238.7) (231.6)   -3.0%  1.5%    (451.6) (470.3)   4.1% 
     Depreciation and Amortization    (567.5) (540.9) (521.4)   -3.6%  -8.1%    (1,136.4) (1,062.3)   -6.5% 
     Other    (146.4) (145.6) (147.1)   1.0%  0.5%    (292.9) (292.6)   -0.1% 
                 
GROSS PROFIT    889.9  1,079.5  1,141.5    5.8%  28.3%    1,798.9  2,221.0    23.5% 
                 
 Sales Expenses    (281.2) (273.6) (275.3)   0.6%  -2.1%    (542.8) (548.9)   1.1% 
                 
     Personnel    (60.4) (60.2) (61.6)   2.3%  2.1%    (133.6) (121.8)   -8.8% 
     Materials    (7.4) (6.8) (11.3)   65.6%  54.0%    (14.2) (18.2)   28.3% 
     Subcontracted Services    (198.7) (175.1) (179.8)   2.7%  -9.5%    (366.9) (354.9)   -3.3% 
         Advertising and Marketing    (42.2) (24.8) (35.6)   43.4%  -15.8%    (62.6) (60.3)   -3.6% 
         Other    (156.5) (150.3) (144.2)   -4.1%  -7.8%    (304.3) (294.5)   -3.2% 
     Depreciation and Amortization    (4.1) (4.8) (4.7)   -0.6%  15.2%    (8.2) (9.5)   15.5% 
     Other    (10.6) (26.7) (17.9)   -32.8%  68.4%    (19.9) (44.6)   124.4% 
                 
 General and Administrative Expenses    (219.3) (204.0) (207.0)   1.5%  -5.6%    (426.2) (411.0)   -3.6% 
                 
         Personnel    (50.0) (44.9) (46.8)   4.1%  -6.5%    (101.7) (91.7)   -9.8% 
         Materials    (5.0) (0.6) (0.6)   -3.5%  -88.3%    (9.5) (1.2)   -87.5% 
         Subcontracted Services    (155.4) (148.4) (149.6)   0.8%  -3.7%    (296.3) (298.0)   0.6% 
         Depreciation and Amortization    (6.0) (6.3) (6.3)   -0.6%  5.3%    (12.1) (12.7)   4.9% 
         Other    (3.0) (3.7) (3.7)   -0.5%  24.6%    (6.7) (7.4)   10.9% 
                 
 Information Technology    (121.0) (116.0) (128.0)   10.3%  5.8%    (237.0) (244.0)   3.0% 
                 
         Personnel    (7.0) (6.0) (6.0)   0.7%  -13.5%    (13.7) (12.0)   -12.3% 
         Materials    (0.1) (0.3) (0.3)   -8.4%  114.5%    (0.6) (0.6)   -3.2% 
         Subcontracted Services    (35.1) (27.0) (37.1)   37.2%  5.6%    (66.9) (64.1)   -4.2% 
         Depreciation and Amortization    (71.6) (77.0) (75.6)   -1.9%  5.5%    (141.4) (152.6)   7.9% 
         Other    (7.2) (5.7) (9.1)   59.1%  25.3%    (14.4) (14.8)   2.3% 
                 
 Provisions and Losses    (224.7) (218.3) (271.6)   24.4%  20.9%    (412.6) (489.9)   18.7% 
                 
         Doubtful Accounts    (84.3) (95.7) (112.5)   17.6%  33.4%    (197.1) (208.2)   5.6% 
         Contingencies    (140.3) (122.6) (159.2)   29.8%  13.4%    (215.5) (281.8)   30.7% 
                 
 Other Operating Revenues (Exp.)   100.6  34.4  86.5    151.8%  -14.0%    119.3  120.9    1.3% 
                 
         Goodwill Amortization    (20.0) (21.0) (18.6)   -11.6%  -7.3%    (41.3) (39.6)   -4.1% 
         Other    120.6  55.4  105.1    89.7%  -12.9%    160.6  160.5    -0.1% 
                 
 
EARNINGS BEFORE FINANCIAL RESULT (EBIT)   144.3  301.9  346.1    14.6%  139.8%    299.5  648.0    116.3% 
                 

R$ Million     2Q06  1Q07  2Q07    D Quarter D 12 Months    6M06  6M07    D Year 
OPERATING COSTS AND EXPENSES    (2,306.4) (2,389.0) (2,397.3)   0.3%  3.9%    (4,628.1) (4,786.2)   3.4% 
                 
     Personnel    (162.7) (151.3) (156.2)   3.2%  -4.0%    (352.9) (307.5)   -12.9% 
     Materials    (105.2) (77.3) (101.7)   31.6%  -3.3%    (189.1) (179.0)   -5.3% 
     Subcontracted Services    (575.2) (564.5) (562.4)   -0.4%  -2.2%    (1,119.1) (1,126.9)   0.7% 
     Interconnection    (480.6) (576.5) (570.4)   -1.1%  18.7%    (979.1) (1,147.0)   17.1% 
     Advertising and Marketing    (42.2) (24.8) (35.6)   43.4%  -15.8%    (62.6) (60.3)   -3.6% 
     Provisions and Losses    (224.7) (218.3) (271.6)   24.4%  20.9%    (412.6) (489.9)   18.7% 
     Other    (46.7) (126.2) (72.7)   -42.4%  55.8%    (173.3) (198.9)   14.8% 
     Depreciation and Amortization    (669.3) (650.1) (626.6)   -3.6%  -6.4%    (1,339.3) (1,276.7)   -4.7% 
                 

Brasil Telecom Participações S.A.    Page 15 of 30  

In the 2Q07, operating costs and expenses totaled R$2,397.3 million, in line with the R$2,389.0 million recorded in the 1Q07. The figures represents an increase of 3.9% over the R$2,306.4 million posted in 2Q06 as a result of higher interconnection expenses and provisions for doubtful accounts, partially offset by the reduction in manageable expenses, such as personnel, material, subcontracted services and advertising and marketing.

Graph 7: Operating Costs and Expenses Breakdown
(Excludes Depreciation and Amortization)

2Q07    2Q06 
R$1,770.7 million    R$1,637.2 million 
 


Personnel costs and expenses came to R$156.2 million, up 3.2% over the previous quarter and down 4.0% on the 2Q06. At the end of the 2Q07, a total of 5,868 people worked in the Group, edging up by a mere 0.5% over March 2007, with 5,258 workers in the fixed telephony segment and 610 at BrT Mobile.

Subcontracted service costs and expenses, excluding interconnection, advertising and marketing, totaled R$562.4 million in the 2Q07, in line with the figure for the previous quarter and 2.2% lower than in the 2Q06, driven by the company’s cost control strategy.

Interconnection costs reached R$570.4 million, down 1.1% on the 1Q07 and up 18.7% on the 2Q06. This elevation due to the expansion in the mobile telephony customer base and the implementation of the full bill, partially offset by the reduction of 20% in TU-RL as of January 1st, 2007 and the increase in BrT Mobile’s market share.

Advertising and marketing expenses totaled R$35.6 million, up 43.4% over the 1Q07 as a result of the intensification of campaigns, especially for Mother’s Day. In comparison to the previous year, these expenses dropped 15.8%, reflecting the optimization of expenses with advertisement and marketing as a result of the brand convergence.

The ratio between Losses on Accounts Receivable and gross revenue reached 2.8% in the 2Q07, bringing the total in the quarter to R$112.5 million, 0.3 p.p. up on the 2.5% recorded in the 1Q07 and 0.5 p.p. up on the 2.3% recorded in the 2Q06. This increase is explained by the recognition of a loss provision for large client accounts.

Provisions for contingencies totaled R$159.2 million, R$36.6 million and R$18.9 million higher than in the 1Q07 and 2Q06, respectively, mainly due to tax lawsuits.

Material costs and expenses amounted to R$101.7 million in the 2Q07, 31.6% higher than in the 1Q07 due to higher handset sales, especially on Mother’s Day. Compared to the previous year BrT had savings of 3.3% . BrT Mobile’s material costs and expenses totaled R$78.8 million, representing 77.5% of the Group’s total material costs and expenses, given that the cost of goods sold is booked in this line.

Brasil Telecom Participações S.A.    Page 16 of 30  

Despite higher handset sales, SAC in the quarter was R$89.7, 8.3% lower than in the 1Q07 and 41.0% lower than in the 2Q06, reflecting the level of subsidies in the market and the optimization of expenses with advertising and marketing as a result of brand convergence.

Depreciation and amortization costs reached R$626.6 million in the 2Q07, down 3.6% and 6.4% on the 1Q07 and 2Q06, respectively, due to the increase in fully depreciated assets.

Other operating costs and expenses totaled R$72.7 million, down 42.4% on the previous quarter as a result of the booking of PIS/COFINS tax credits in the amount of R$26.5 million.

EBITDA

Table 9: EBITDA Margin – Gains and Losses

R$ Million     2Q06  Vertical     1Q07  Vertical     2Q07  Vertical 
GROSS REVENUES    3,619.3  147.7%    3,897.1  144.8%    3,972.9  144.8% 
             
   FIXED TELEPHONY    2,796.3  114.1%    2,824.4  105.0%    2,775.3  101.2% 
             
       Local Service    1,702.2  69.5%    1,648.0  61.2%    1,634.4  59.6% 
       Public Telephony    138.8  5.7%    129.0  4.8%    140.4  5.1% 
       Long Distance Service    678.5  27.7%    756.3  28.1%    727.6  26.5% 
       Interconnection    99.7  4.1%    85.0  3.2%    82.4  3.0% 
       Lease of Means    80.0  3.3%    89.7  3.3%    86.0  3.1% 
       Supplementary and Value Added Servi    86.8  3.5%    106.3  4.0%    95.9  3.5% 
       Other    10.2  0.4%    10.0  0.4%    8.6  0.3% 
             
   MOBILE TELEPHONY    289.3  11.8%    429.7  16.0%    511.5  18.6% 
             
   DATA COMMUNICATIONS    533.7  21.8%    642.9  23.9%    686.0  25.0% 
             
Deductions    (1,168.6) -47.7%    (1,206.2) -44.8%    (1,229.5) -44.8% 
NET REVENUES    2,450.7  100.0%    2,690.9  100.0%    2,743.3  100.0% 
             
OPERATING COSTS AND EXPENSES    (1,637.2) -66.8%    (1,738.9) -64.6%    (1,770.7) -64.5% 
       Personnel    (162.7) -6.6%    (151.3) -5.6%    (156.2) -5.7% 
       Materials    (105.2) -4.3%    (77.3) -2.9%    (101.7) -3.7% 
       Subcontracted Services    (575.2) -23.5%    (564.5) -21.0%    (562.4) -20.5% 
       Interconnection    (480.6) -19.6%    (576.5) -21.4%    (570.4) -20.8% 
       Advertising and Marketing    (42.2) -1.7%    (24.8) -0.9%    (35.6) -1.3% 
       Provisions and Losses    (224.7) -9.2%    (218.3) -8.1%    (271.6) -9.9% 
       Other    (46.7) -1.9%    (126.2) -4.7%    (72.7) -2.6% 
             
EBITDA    813.6  33.2%    952.0  35.4%    972.7  35.5% 
             

Brasil Telecom Participações S.A.    Page 17 of 30  

Table 10: EBITDA Margin of Services

R$ Million     2Q06   1Q07   2Q07    D Quarter D 12 Months    6M06  6M07    D Year 
               
GROSS REVENUES    3,619.3  3,897.1  3,972.9    1.9%  9.8%    7,274.2  7,869.9    8.2% 
       Services    3,549.8  3,844.9  3,890.2    1.2%  9.6%    7,150.1  7,735.1    8.2% 
       Products    69.5  52.2  82.7    58.4%  19.0%    124.1  134.9    8.7% 
DEDUCTIONS    (1,168.6) (1,206.2) (1,229.5)   1.9%  5.2%    (2,346.6) (2,435.7)   3.8% 
       Services    (1,146.6) (1,184.7) (1,195.9)   0.9%  4.3%    (2,305.2) (2,380.6)   3.3% 
       Products    (21.9) (21.5) (33.6)   56.3%  53.3%    (41.4) (55.1)   33.3% 
NET REVENUES    2,450.7  2,690.9  2,743.3    2.0%  11.9%    4,927.6  5,434.2    10.3% 
       Services    2,403.2  2,660.2  2,694.3    1.3%  12.1%    4,844.9  5,354.4    10.5% 
       Products    47.5  30.7  49.1    59.9%  3.2%    82.7  79.8    -3.6% 
EBITDA    813.6  952.0  972.7    2.2%  19.6%    1,638.9  1,924.6    17.4% 
       EBITDA Margin    33.2%  35.4%  35.5%    0.1 p.p.  2.3 p.p.    33.3%  35.4%    2.2 p.p. 
       EBITDA Margin - Services    33.9%  35.8%  36.1%    0.4 p.p.  2.2 p.p.    33.8%  35.9%    2.1 p.p. 
       Variation    0.7 p.p.  0.4 p.p.  0.6 p.p.    0.2 p.p.  0.0 p.p.    0.6 p.p.  0.5 p.p.    0.0 p.p. 
                 

Brasil Telecom’s consolidated EBITDA was R$972.7 million in the 2Q07, while consolidated EBITDA margin reached 35.5% in the quarter. EBITDA was R$952.0 million, with EBITDA margin of 35.4%, in the 1Q07, and R$813.6 million in the 2Q06, accompanied by EBITDA margin of 33.2% .

Graph 8 - EBITDA

Brasil Telecom Móvel EBITDA was R$5.2 million, positive for the second consecutive time, follow the R$4.4 million recorded in the 1Q07. EBITDA margin was R$1.2%, 0.1 p.p. above the 1.1% recorded in the 1Q07.

Brasil Telecom Participações S.A.    Page 18 of 30  

FINANCIAL INCOME

Table 11: Consolidated Financial Income

R$ Million    2Q06  1Q07  2Q07    DQuarter D 12 Months    6M06  6M07    D Year 
Financial Revenue    193.7  161.4  144.0    -10.8%  -25.7%    309.8  305.4    -1.4% 
       Local Currency    197.3  161.4  141.8    -12.1%  -28.1%    308.5  303.2    -1.7% 
       Foreign Currency    (3.6) 0.1  2.2    3295.5%  -160.8%    1.3  2.2    74.9% 
Financial Expenses    (227.4) (227.0) (160.6)   -29.3%  -29.4%    (418.8) (387.6)   -7.5% 
       Local Currency    (182.2) (202.0) (143.1)   -29.2%  -21.5%    (332.5) (345.0)   3.8% 
       Foreign Currency    (45.2) (25.0)      (17.5)   -30.0%  -61.3%    (86.3) (42.5)   -50.7% 
Interest on Own Capital    (265.5) (267.8) -    -100.0%  -100.0%    (265.5) (267.8)   0.9% 
                 
Financial Result    (299.2) (333.3)      (16.6)   -95.0%  -94.5%    (374.5) (349.9)   -6.5% 
                 

In the 2Q07, Brasil Telecom’s financial income was an expense of R$16.6 million. Excluding the effect of interest on equity credited in the 1Q07, this variation was positive by R$48.9 million due to the lower financial expenses as a result of: (i) the redemption of all outstanding debentures of the 4th issuance, being the third public issuance, of R$500 million and the respective decline in financial charges; (ii) an overall reduction in the cost of BNDES loans, given the reduction in the UMBNDES rate from 0.039398 in March 2007 to 0.036913 in June 2007; and (iii) the local-currency appreciation of 6.1%, impacting liabilities denominated in foreign currency.

NET INCOME

Brasil Telecom posted net income of R$145.5 million in the 2Q07, equivalent to R$0.4013/share or US$1.0417/ADR. In the 2Q06, the company posted net income of R$105.0 million, equivalent to R$0.2897/1,000 shares or US$0.6692/ADR.

INDEBTEDNESS

Table 12: Indebtedness

Debt (R$ Million)   2Q06  1Q07  2Q07    D Quarter D 12 Months 
Short Term    1,303.7  1,459.0  782.6    -46.4%  -40.0% 
In R$    1,013.5  1,196.4  514.1    -57.0%  -49.3% 
In US$    29.1  15.1  25.6    69.3%  -12.1% 
In Yen    84.7  75.6  69.9    -7.5%  -17.5% 
In Currency Basket    75.3  60.6  48.2    -20.6%  -36.1% 
Hedge Adjustment    101.1  111.3  124.8    12.1%  23.5% 
Long Term    2,948.5  3,608.6  3,520.3    -2.4%  19.4% 
In R$    1,663.8  2,562.7  2,508.2    -2.1%  50.8% 
In US$    491.3  435.3  408.9    -6.1%  -16.8% 
In Yen    327.3  225.6  203.1    -10.0%  -38.0% 
In Currency Basket    154.1  100.8  86.5    -14.1%  -43.9% 
Hedge Adjustment    312.0  284.3  313.6    10.3%  0.5% 
Total Debt    4,252.2  5,067.7  4,302.9    -15.1%  1.2% 
(-) Cash    2,034.7  3,923.9  2,842.1    -27.6%  39.7% 
(-) Contractual Retentions    191.4  -  -    N.A.  -100.0% 
(-) Temporary Investments    106.5  -  200.8    N.A.  88.4% 
Net Debt    1,919.5  1,143.8  1,260.0    10.2%  -34.4% 
           

Brasil Telecom Participações S.A.    Page 19 of 30  

Table 13: Indebtedness

Description  Currency  Annual Cost  Maturity  R$ Million  Long Term % 
     
Total  Short Term  Long Term 
 
Foreign Currency               
               
     Financial Institutions I  US$  Lib6+0.5%  jul/08 - jul/13  32.7  9.9  22.8  69.8% 
     Bonds - US$200 MM  US$  9.38%  Feb-14  400.8  15.6  385.2  96.1% 
     Financial Institutions II  Yen  Jibor6 + 1.92%  Mar-11  272.3  69.6  202.7  74.5% 
     Financial Institutions III  Yen  3.36%  Feb-09  0.7  0.3  0.3  49.3% 
     Suppliers I  US$  1.75%  Feb-14  1.0  0.1  0.9  85.1% 
               
Foreign Currency Total        707.5  95.5  612.0  86.5% 
               
 
Local Currency               
               
     BRB - Fixed Line  R$  2.43%  Dec-33  5.8  0.1  5.7  98.8% 
 
     BRB - GSM  R$  2.43%  Dec-33  19.5  0.2  19.3  98.8% 
 
     BNDES  UMBNDES  5.85%  Nov-07  4.4  4.4  -  0.0% 
     BNDES  UMBNDES  6.50%  Oct-07  12.7  12.7  -  0.0% 
     BNDES  UMBNDES  5.50%  Apr-11  117.7  31.1  86.5  73.5% 
     BNDES  R$  5.85%  Oct-07  41.9  41.9  -  0.0% 
     Public Debenture 4th Emission  R$  104% of the CDI  Jun-13  1,089.6  9.6  1,080.0  99.1% 
     FCO I  R$  10.94%  Jan-08  2.9  2.9  -  0.0% 
     FCO II  R$  11.50%  Apr-11  29.0  7.7  21.3  73.3% 
     BNDES  R$  TJLP + 5,85%  Dec-07  212.6  212.6  -  0.0% 
     BNDES  R$  TJLP + 6,5%  Dec-07  8.1  8.1  -  0.0% 
     BNDES  R$  TJLP + 5,5%  Feb-11  800.3  220.9  579.4  72.4% 
     BNDES  R$  TJLP + 2,3%  May-14  30.4  0.3  30.1  99.0% 
     BNDES  R$  TJLP + 4,3%  May-14  782.3  9.7  772.5  98.8% 
               
Local Currency Total        3,157.1  562.3  2,594.8  82.2% 
               
 
 
             
Total Debt before Hedge Adjustments      3,864.6  657.8  3,206.8  83.0% 
             
     Hedge Adjustments        438.4  124.8  313.6  71.5% 
               
TOTAL DEBT        4,302.9  782.6  3,520.3  81.8% 
               

Table 14: Long Term Debt Amortization Schedule

Maturity  % Long Term Debt 
2008  6.3% 
2009  15.1% 
2010  16.9% 
2011  18.6% 
2012  14.8% 
2013  14.8% 
2014  13.6% 
   

Brasil Telecom Participações S.A.    Page 20 of 30  

At end June 2007, Brasil Telecom’s gross debt reached R$4,302.9 million, 15.1% lower than at end March 2007. In June, 81.8% of total debt was allocated to long-term instruments.

On April 17, 2007, Brasil Telecom S.A. exercised its option for the early redemption provided for in the 4th Debenture Issue Indenture, constituting the 3rd Public Issue, as communicated to debenture holders on March 28, 2007. A total of R$521.1 million was disbursed to redeem all the debentures.

Brasil Telecom closed the quarter with temporary investments of R$200.8 million and R$2,842.1 million in cash, versus R$3,923.9 million at the end of March 2007. Consolidated net debt reached R$1,260.0 million, 10.2% higher than in March 2007.

At end June 2007, debt pegged to foreign exchange variation, excluding hedge adjustments, totaled R$842.2 million, of which R$434.5 million was in U.S. dollar, R$134.7 in a basket of currencies, and R$273.0 million in the Japanese yen. On June 30, 2007, Brasil Telecom held hedge positions for 35.9% of its debt pegged to foreign exchange variation, resulting in total exposure of 14.0% of total debt.

The company’s consolidated debt had cumulative costs equivalent to 8.9% per annum in June, or 73.4% of the CDI rate.

At the close of June 2007, Brasil Telecom Participações’ financial leverage, represented by the net debt/shareholders’ equity ratio, was equivalent to 23.3% , versus 21.7% in the previous quarter.

INVESTMENT ON PERMANENT ASSETS (CAPEX)

Table 15: Investments Breakdown

R$ Million    2Q06  1Q07  2Q07    D Quarter  D 12 Months    6M06  6M07    D Year 
Network Expansion    105.8  48.0  84.3    75.7%  -20.3%    144.0  132.3    -8.1% 
 Conventional Telephony    15.8  1.9  0.0    -99.6%  -100.0%    16.1  1.9    -87.9% 
 Transmission Backbone    9.8  7.6  21.1    177.7%  116.5%    12.2  28.7    136.2% 
 Data Network    79.0  38.5  57.1    48.3%  -27.7%    112.9  95.6    -15.3% 
 Intelligent Network    0.1  0.1  2.2    2150.0%  2415.5%    0.8  2.3    186.2% 
 Network Management Systems    0.5  0.5  4.0    669.9%  728.8%    0.9  4.5    423.9% 
 Other Investments for Network Expansion    0.7  (0.7) (0.1)   -86.6%  N.A.    1.2  (0.8)   N.A. 
Network Operation    53.1  48.9  54.0    10.4%  1.6%    104.0  102.8    -1.1% 
Public Telephony    1.9  0.9  0.6    -37.4%  -70.4%    3.4  1.5    -56.1% 
Information Technology    14.8  8.2  30.2    266.9%  103.8%    23.3  38.4    65.0% 
Expansion Personnel    19.5  18.7  19.9    6.4%  1.7%    46.4  38.5    -17.0% 
Regulatory    60.1  12.9  27.6    114.0%  -54.0%    121.3  40.5    -66.6% 
Others    19.4  9.7  35.6    267.4%  84.1%    41.6  45.3    8.9% 
Expansion Financial Expenses    -  1.2  5.2    321.7%  N.A.    0.0  6.4    N.A. 
                 
TOTAL - FIXED LINE TELEPHONY    274.6  148.5  257.3    73.3%  -6.3%    484.0  405.8    -16.1% 
                 
 
R$ Million    2Q06  1Q07  2Q07    D Quarter  D 12 Months    6M06  6M07    D Year 
Mobile Network    60.3  4.3  45.2    958.1%  -24.9%    65.5  49.5    -24.3% 
                 
TOTAL - MOBILE TELEPHONY    60.3  4.3  45.2    958.1%  -24.9%    65.5  49.5    -24.3% 
                 
 
R$ Million    2Q06  1Q07  2Q07    D Quarter  D 12 Months    6M06  6M07    D Year 
TOTAL INVESTMENT    334.9  152.8  302.6    98.1%  -9.6%    549.5  455.4    -17.1% 
                 
 
CASH FLOW CONCILIATION    2Q06  1Q07  2Q07    D Quarter  D 12 Months    6M06  6M07    D Year 
Variation of Economic and Financial Investment   (60.7) 225.2  24.8    -89.0%  N.A.    347.6  250.0    -28.1% 
                 
INVESTMENT CASH FLOW    274.2  378.0  327.4    -13.4%  19.4%    897.1  705.4    -21.4% 
                 

Brasil Telecom Participações S.A.    Page 21 of 30 

In the 2Q07, Brasil Telecom’s CAPEX totaled R$302.6 million, R$257.3 million of which was allocated to wireline telephony, including voice, data, IT and regulatory issues, and R$45.2 million to mobile telephony. The company’s CAPEX rose a substantial 98.1% over the 1Q07, especially in areas involving mobile telephony, data network, information technology and regulatory matters.

STOCK MARKET

At the end of the 2Q07, Brasil Telecom Participações’ market capitalization, calculated by the weighting of common and preferred shares, rose to R$12,657.7 million, an increase of 78.8% on the R$7,077.9 million recorded at the end of June 2006. In the same period, the Ibovespa and Itel indexes gained 48.5% and 49.7%, respectively.

In the quarter, the company’s common shares (BRTP3) outperformed the IBOVESPA index by 11.2 p.p. while the preferred shares (BRTP4) outperformed the IBOVESPA index by 9.0 p.p. In the last twelve months, the common and preferred shares have registered gains of 40.3 p.p. and 18.6 p.p., respectively.

Table 16: Stock Market Performance

    Closing Price as of
 6/29/2007 		   Performance   
    In 2Q07  In 12 Months  In 24 Months 
Common Shares (BRTP3) (in R$/1,000 shares)   53.90  29.9%  88.8%  109.9% 
Preferred Shares (BRTP4) (in R$/1,000 shares)   23.63  27.7%  67.1%  41.1% 
ADR (BRP) (in US$/ADR)   60.46  34.8%  104.9%  92.6% 
IBOVESPA (points)   54,392  18.7%  48.5%  117.1% 
ITEL (points)   1,245  23.7%  49.7%  50.5% 
IGC (points)   6,343  19.0%  55.4%  153.0% 
Dow Jones (points)   13,409  8.5%  20.3%  30.5% 
Market Capitalization (Million)   12,657.7  29.0%  78.8%  73.6% 
         

Graph 9: Stock Market Performance in 2Q07 
Bovespa and NYSE 
(Base 100 = 03/30/2007)


Graph 10: Market Capitalization Evolution 
(R$ billion)


Table17: Theoretical Portfolio Weighting – May / August

  Ibovespa  Itel  IGC 
BRTP3  0.450%  6.502%  0.359% 
BRTP4  0.674%  13.498%  0.746% 
       

Brasil Telecom Participações S.A.    Page 22 of 30 

SHAREHOLDING STRUCTURE

Brasil Telecom’s Executive Board proposed the grouping of shares, which was duly approved by the Extraordinary Meeting of the Board of Directors held on April 27, 2007. As a result, the total number of shares declined by three digit places.

Table 18: Shareholding Structure

Jun/07  Common Shares  % Preferred Shares  % Total Shares  %
Solpart Participações S.A.  68,356,160  51.0%  -  0.0%  68,356,160  18.8% 
ADR Free Float  -  0.0%  145,426,960  63.2%  145,426,960  40.0% 
Treasury  1,480,800  1.1%  -  0.0%  1,480,800  0.4% 
Free Float in Bovespa  64,194,728  47.9%  84,510,565  36.8%  148,705,293  40.9% 
             
Total  134,031,688  100.0%  229,937,525  100.0%  363,969,213  100.0% 
             
 
 
Mar/07  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 Free Float  -  0.0%  155,120,025,000  67.5%  155,120,025,000  42.6% 
Treasury  1,480,800,000  1.1%  -  0.0%  1,480,800,000  0.4% 
Free Float in Bovespa  64,194,727,219  47.9%  74,817,500,658  32.5%  139,012,227,877  38.2% 
             
Total  134,031,688,203  100.0%  229,937,525,684  100.0%  363,969,213,887  100.0% 
             

UPCOMING EVENTS

Portuguese Conference Call and Webcast: 2Q07 Results
Connection number: (11) 2101-4848
Access Code: Brasil Telecom
Link: http://www.brasiltelecom.com.br/ir
Date: August 1st, 2007 (Wednesday)
Time: 09:00 a.m. (New York)
           10:00 p.m. (Brasília)
           2:00 p.m. (London)

English Conference Call and Webcast: 2Q07 Results
Connection number: (+1 1973) 935-8893
Access Code: 8992737
Link: http://www.brasiltelecom.com.br/ir
Date: August 1st, 2007 (Wednesday)
Time: 11:00 a.m. (New York)
           12:00 p.m. (Brasília)
           4:00 p.m. (London)

Brasil Telecom Participações S.A.    Page 23 of 30 

FINANCIAL STATEMENTS

BRASIL TELECOM PARTICIPAÇÕES S.A.

Table 19: Consolidated Balance Sheet

R$ Million     Jun/06   Mar/07  Jun/07 
 
       
CURRENT ASSETS    5,878.0  7,638.4  6,781.7 
       
Cash, Bank Accounts and High-liquid Investments    2,034.7  3,923.9  2,842.1 
Temporary Investments    106.5  -  200.8 
Accounts Receivables (Net)   2,105.8  2,157.7  2,144.2 
Deferred and Recoverable Taxes    1,158.9  1,129.5  1,111.5 
Other Recoverable Amounts    130.7  262.7  328.6 
Inventory    65.4  49.1  36.7 
Contractual Retentions    191.4  -  - 
Other    84.6  115.6  117.8 
       
LONG TERM ASSETS    1,901.4  2,187.7  2,285.1 
       
Loans and Financing    98.7  0.8  6.9 
Deferred and Recoverable Taxes    1,533.9  1,614.2  1,597.2 
Other    268.7  572.7  681.1 
       
PERMANENT ASSETS    8,606.9  7,668.9  7,339.8 
       
Investment (Net)   367.0  311.9  292.7 
Property, Plant and Equipment (Net)   6,886.7  6,086.4  5,860.6 
 Property, Plant and Equipment (Gross)   25,310.0  26,129.1  26,309.6 
 Accumulated Depreciation    (18,423.3) (20,042.8) (20,449.0)
Intangible (Net)*    1,146.3  1,150.5  1,073.5 
 Property, Plant and Equipment (Gross)   2,235.9  2,416.6  2,430.9 
 Accumulated Depreciation    (1,089.6) (1,266.2) (1,357.4)
Deferred Assets (Net)   207.0  120.2  112.9 
       
TOTAL ASSETS    16,386.4  17,495.0  16,406.6 
       
 
       
CURRENT LIABILITIES    4,677.2  5,248.2  4,068.3 
       
Loans and Financing    1,303.7  1,459.0  782.6 
Suppliers    1,422.7  1,265.1  1,293.4 
Taxes and Contributions    890.5  945.4  1,005.1 
Dividends Payable    341.9  856.5  365.4 
Provisions    181.0  220.7  191.6 
Salaries and Benefits    128.8  96.2  129.1 
Consignment for Third Parties    177.9  121.2  108.1 
Authorization for Services Exploration    97.2  154.7  71.9 
Other    133.6  129.3  121.0 
       
LONG TERM LIABILITIES    4,666.7  5,186.1  5,074.4 
       
Loans and Financing    2,948.5  3,608.6  3,520.3 
Provisions    1,096.6  1,186.8  1,141.4 
Taxes and Contributions    328.5  73.0  87.0 
Authorization for Services Exploration    260.2  226.1  221.7 
Other    32.9  91.6  104.0 
       
DEFERRED INCOME    82.0  -  - 
       
MINORITY INTEREST    1,761.2  1,800.9  1,858.5 
       
SHAREHOLDERS' EQUITY    5,199.3  5,259.9  5,405.3 
       
Capital Stock    2,596.3  2,596.3  2,596.3 
Capital Reserves    309.2  309.2  309.2 
Profit Reserves    282.7  306.3  306.3 
Retained Earnings    2,032.0  2,068.9  2,214.4 
Treasury Shares    (20.8) (20.8) (20.8)
       
TOTAL LIABILITIES    16,386.4  17,495.0  16,406.6 
       
* In compliance with CVM Deliberation 488 and 489 the line of Tangible Permanent Asset is created 

Brasil Telecom Participações S.A.    Page 24 of 30 

Table 20: Consolidated Balance Sheet - Holding

R$ Million    Jun/06  Mar/07  Jun/07 
 
       
CURRENT ASSETS    1,175.8  1,949.0  1,577.2 
       
Cash and Equivalents    859.7  1,445.2  1,336.9 
Deferred Taxes    172.8  114.9  93.2 
Other Recoverable Amounts    1.8  0.5  1.6 
Dividends / Interest on Own Capital Receivable    140.1  381.2  140.1 
Other    1.4  7.1  5.4 
       
LONG TERM ASSETS    998.6  235.7  238.1 
       
Loans and Financing    701.8  -  - 
Deferred and Recoverable Taxes    250.4  230.4  232.7 
Other    46.4  5.3  5.4 
       
PERMANENT ASSETS    3,660.0  3,733.9  3,850.8 
       
Investment (Net)   3,658.9  3,732.9  3,849.9 
Property, Plant and Equipment (Net)   1.1  0.9  0.9 
   Property, Plant and Equipment (Gross)   57.4  52.5  52.5 
   Accumulated Depreciation    (56.3) (51.5) (51.6)
Intangible (Net)*    -  0.0  0.0 
   Property, Plant and Equipment (Gross)   -  3.9  3.9 
   Accumulated Depreciation    -  (3.9) (3.9)
       
TOTAL ASSETS    5,834.5  5,918.6  5,666.1 
       
 
       
CURRENT LIABILITIES    567.4  651.8  253.1 
       
Loans and Financing    283.2  -  - 
Suppliers    0.8  0.3  0.3 
Taxes and Contributions    40.8  41.2  23.6 
Dividends Payable    213.3  610.3  228.9 
Salaries and Benefits    0.0  0.0  0.0 
Consignment for Third Parties    27.9  0.1  0.1 
Other    1.4  0.0  0.3 
       
LONG TERM LIABILITIES    65.5  6.9  7.6 
       
Taxes and Contributions    61.5  2.5  3.1 
Other    4.0  4.4  4.5 
       
SHAREHOLDERS' EQUITY    5,201.6  5,259.9  5,405.3 
       
Capital Stock    2,596.3  2,596.3  2,596.3 
Capital Reserves    309.2  309.2  309.2 
Profit Reserves    282.7  306.3  306.3 
Retained Earnings    2,034.3  2,068.9  2,214.4 
Treasury Shares    (20.8) (20.8) (20.8)
       
TOTAL LIABILITIES    5,834.5  5,918.6  5,666.1 
       
* In compliance with CVM Deliberation 488 and 489 the line of Tangible Permanent Asset is created 

Brasil Telecom Participações S.A.    Page 25 of 30 

Table 21: Consolidated Cash Flow

R$ Million    2Q06  1Q07  2Q07    D Quarter D 12 Months    6M06  6M07    D Year 
OPERATING ACTIVITIES                         
(+) Net Income of the Period    105.0  169.9  145.5    -14.4%  38.5%    138.5  315.3    127.6% 
 
(+) Minority Participation    38.5  70.0  57.7    (0.2) 49.8%    40.3  127.7    216.6% 
 
(+) Items with no Cash Effects    1,009.7  763.7  926.2    0.2  -8.3%    2,082.2  1,689.8    -18.8% 
 
     Depreciation and Amortization    671.2  650.2  626.6    -4%  -6.6%    1,343.2  1,276.8    -4.9% 
     Losses with Accounts Receivables    105.8  87.8  87.1    -0.8%  -17.7%    201.9  174.9    -13.4% 
     Provision for Doubtful Accounts    (21.4) 7.9  25.4    221.9%  N.A.    (4.8) 33.3    N.A. 
     Provision for Contingencies    140.3  122.6  159.2    29.8%  13.4%    215.5  281.8    30.7% 
     Provision for Pension Funds    12.5  11.7  (27.2)   N.A.  N.A.    19.7  (15.5)   N.A. 
     Deferred Taxes    104.1  (116.5) 55.5    N.A.  -46.6%    308.7  (60.9)   N.A. 
     Results from the Write-off of Permanent Assets    (2.8) -  (0.4)   N.A.  -86.0%    (2.0) (0.4)   -81.2% 
 
(-) Equity Changes    (247.1) (495.6) (491.2)   -0.9%  98.8%    (1,125.0) (986.8)   -12.3% 
     Clients' Accounts Receivable    (47.4) (125.8) (99.0)   -21.3%  108.7%    (150.1) (224.7)   49.7% 
     Inventories    14.9  15.1  12.4    -17.7%  -16.6%    17.7  27.5    55.7% 
     Contract Retentions    -  -  -    N.A.  N.A.    (191.4) -    N.A. 
     Court Deposits    (46.2) (120.1) (191.8)   59.7%  315.0%    (85.5) (311.9)   264.7% 
     Personnel, Charges and Social Benefits    15.9  (2.3) 13.9    N.A.  -12.7%    12.5  11.6    -7.5% 
     Accounts Payable and Provisioned Expenses    45.1  (0.5) 56.6    N.A.  25.5%    (46.3) 56.1    N.A. 
     Taxes    (197.2) (26.0) 51.6    N.A.  N.A.    (423.3) 25.6    N.A. 
     Financial Expenses    91.6  (38.8) (62.0)   59.6%  N.A.    36.1  (100.8)   N.A. 
     Authorization for Services Exploration    23.0  25.3  (87.2)   N.A.  N.A.    49.6  (61.8)   N.A. 
     Provision for Contingencies    (180.2) (99.5) (133.1)   33.8%  -26.1%    (290.7) (232.6)   -20.0% 
     Provision for Pension Funds    (29.9) (9.3) (73.2)   N.A.  144.7%    (64.1) (82.5)   28.7% 
     Other Assets and Liabilities' Accounts    63.4  (113.7) 20.5    N.A.  -67.7%    10.6  (93.2)   N.A. 
 
(=) Cash Flow from Operating Activities    906.1  507.9  638.1    25.6%  -29.6%    1,136.1  1,146.0    0.9% 
                 
 
INVESTMENT ACTIVITIES                         
     Temporary Investments    (106.5) 89.4  (201.0)   N.A.  88.8%    (106.5) (111.6)   4.8% 
     Funds from Sales of Permanent Assets    9.6  0.1  2.1    N.A.  -77.9%    9.7  2.2    -77.1% 
     Investments in Permanent Assets    (274.2) (378.0) (327.4)   -13.4%  19.4%    (897.6) (705.4)   -21.4% 
 
(=) Cash Flow from Investment Activities    (371.1) (288.5) (526.2)   82.4%  41.8%    (994.4) (814.8)   -18.1% 
                 
 
FINANCING ACTIVITIES                         
 
     Dividens/Interests on Own Capital paid in the Period    (1.1) (0.7) (491.2)   N.A.  N.A.    (398.4) (491.9)   23.4% 
 
     Loans and Financing    (161.5) (268.8) (702.5)   161.3%  334.9%    (322.3) (971.3)   201.4% 
          Loans Obtained    30.3  -  -    N.A.  N.A.    31.8  -    N.A. 
          Loans Paid    (191.8) (268.8) (702.5)   161.3%  266.3%    (354.1) (971.3)   174.3% 
     Other Financing Flows    (17.7) -  -    N.A.  N.A.    -  -    N.A. 
 
(=) Cash Flow from Financing Activities    (180.2) (269.5) (1,193.7)   343.0%  N.A.    (720.7) (1,463.2)   103.0% 
                 
 
                 
CASH FLOW OF THE PERIOD    354.8  (50.1) (1,081.8)   N.A.  N.A.    (579.1) (1,131.9)   95.5% 
                 
 
                 
CASH, BANK ACCOUNTS and HIGH-LIQUID INVESTMENTS                         
     Current Balance    2,034.7  3,923.9  2,842.1    -27.6%  39.7%    2,034.7  2,842.1    39.7% 
     Previous Balance    1,679.9  3,974.0  3,923.9    -1.3%  133.6%    2,613.8  3,974.0    52.0% 
     Variation    354.8  (50.1) (1,081.8)   N.A.  N.A.    (579.1) (1,131.9)   95.5% 
                 
 
                 
OPERATING CASH FLOW    703.3  507.9  638.1    25.6%  -9.3%    1,136.1  1,146.0    0.9% 
 
(+) Investments on Permanent Assets (includes Investment Suppliers)   (371.1) (378.0) (327.4)   -13.4%  -11.8%    (897.6) (705.4)   -21.4% 
                 
(=) FREE CASH FLOW    332.2  129.9  310.8    139.2%  -6.4%    238.4  440.6    84.8% 
                 
 
                 
SUPLEMENTARY INFORMATION TO THE CASH FLOW                         
     Income and Social Contribution Taxes Paid    3.2  52.8  64.4    22.0%  N.A.    7.2  117.1    N.A. 
     Interest Paid on Loans and Financing    65.4  166.5  111.0    -33.3%  69.7%    235.3  277.5    17.9% 
                 

Brasil Telecom Participações S.A.    Page 26 of 30 

Table 22: Consolidated Accounts Receivable

    2Q06  3Q06  4Q06  1Q07  2Q07 
Total (R$ Million)   2,462.6  2,411.8  2,485.3  2,522.7  2,534.0 
           
       Due    63.6%  66.0%  65.7%  62.9%  64.0% 
       Overdue (up to 30 days)   15.9%  16.0%  16.7%  16.3%  15.6% 
       Overdue (between 31-60 days)   5.3%  4.8%  5.0%  5.9%  4.8% 
       Overdue (between 61-90 days)   3.4%  2.8%  3.1%  3.9%  3.1% 
       Overdue (more than 90 days)   11.9%  10.4%  9.5%  11.0%  12.5% 
           

Brasil Telecom Participações S.A.    Page 27 of 30 

INDICATORS

BRASIL TELECOM PARTICIPAÇÕES S.A.

Table 23: Operating Data and Indicators

FIXED LINE PLANT    2Q06  1Q07  2Q07    D Quarter  D 12 Months 
Lines Installed (Thousand)   10,794.5  10,388.5  10,375.2    -0.1%  -3.9% 
Additional Lines Installed (Thousand)   (19.8) (34.5) (13.3)   -61.4%  -32.8% 
           
Lines in Service - LIS (Thousand)   9,407.1  8,278.0  8,129.4    -1.8%  -13.6% 
         Residential    5,939.9  5,560.3  5,470.3    -1.6%  -7.9% 
         Non-Residential    1,401.4  1,248.7  1,238.5    -0.8%  -11.6% 
         Public Telephones    290.7  275.5  276.0    0.2%  -5.0% 
         Pre-paid    316.1  -  -    N.A.  -100.0% 
         Hybrid Terminals    819.3  561.8  507.7    -9.6%  -38.0% 
         Other (Including PBX)   639.6  631.8  636.9    0.8%  -0.4% 
Additional LIS (Thousand)   (136.0) (139.6) (148.6)   6.4%  9.3% 
           
Active Lines (LIS - Blocked Lines)   8,341.4  8,037.0  7,901.5    -1.7%  -5.3% 
           
Blocked Lines    1,065.7  241.1  227.9    -5.5%  -78.6% 
           
Average LIS (Thousand)   9,475.1  8,347.8  8,203.7    -1.7%  -13.4% 
           
LIS/100 Inhabitants    21.8  18.8  18.4    -2.1%  -15.5% 
Public Telephones/1,000 Inhabitants    6.7  6.3  6.3    -0.1%  -7.1% 
Public Phones/100 Lines Installed    2.7  2.7  2.7    0.3%  -1.2% 
           
Utilization Rate    87.1%  79.7%  78.4%    -1.3 p.p.  -8.8 p.p. 
           
Digitalization Rate    100.0%  100.0%  100.0%    0.0 p.p.  0.0 p.p. 
           
ADSL Accesses (Thousand)   1,154.9  1,383.5  1,453.4    5.1%  25.9% 
    Net Additions (Thousand)   70.8  65.8  69.9    6%  -1% 
    ADSL Penetration (%)   12.3%  16.7%  17.9%    1.2 p.p.  5.6 p.p. 
           
 
PRODUCTIVITY    2Q06  1Q07  2Q07    D Quarter  D 12 Months 
# of Employees - Fixed Telephony    5,384  5,227  5,258    0.6%  -2.3% 
Average # of Employees    5,402  5,213  5,243    0.6%  -3.0% 
LIS/Employee    1,747  1,584  1,546    -2.4%  -11.5% 
           
Gross Revenue/Average # of Employees/Month (R$ Thousand)   172.5  180.6  176.5    -2.3%  2.3% 
EBITDA/Average # of Employees/Month (R$ Thousand)   50.2  60.9  61.8    1.6%  23.2% 
Net Income/Average # of Employees/Month (R$ Thousand)   6.5  10.9  9.2    -14.8%  42.8% 
           
Exceeding Pulses/Average LIS/Month    75.4  57.3  49.4    -13.6%  -34.4% 
Exceeding Minutes/Average LIS/Month    -  4.6  20.3    345.2%  N.A. 
DLD Minutes/Average LIS/Month    49.1  57.4  56.1    -2.3%  14.4% 
Fixed-Mobile Minutes/Average LIS/Month    34.5  40.0  41.4    3.4%  20.0% 
           
Gross Revenue (Fixed Line)/Average LIS/Month (R$)   98.4  112.8  112.8    0.0%  14.6% 
EBITDA/Average LIS/Month    28.6  38.0  39.5    4.0%  38.1% 
Net Earnings/Average LIS/Month    3.7  6.8  5.9    -12.9%  60.0% 
           
 
PROFITABILITY    2Q06  1Q07  2Q07    D Quarter  D 12 Months 
EBITDA Margin    33.2%  35.4%  35.5%    0.1 p.p.  2.3 p.p. 
Net Margin    4.3%  6.3%  5.3%    -1.0 p.p.  1.0 p.p. 
Return on Equity - ROE    2.0%  3.2%  2.7%    -0.5 p.p.  0.7 p.p. 
           
 
CAPITAL STRUCTURE    2Q06  1Q07  2Q07    D Quarter  D 12 Months 
Cash, Bank Accounts and High-liquid Investments (R$ Million)   2,034.7  3,923.9  2,842.1    -27.6%  39.7% 
Temporary Investments (R$ Million)   106.5  -  200.8    N.A.  88.4% 
Contractual Retentions (R$ Million)   191.4  -  -    N.A.  -100.0% 
Total Debt (R$ Million)   4,252.2  5,067.7  4,302.9    -15.1%  1.2% 
Short Term Debt    1,303.7  1,459.0  782.6    -46.4%  -40.0% 
Long Term Debt    2,948.5  3,608.6  3,520.3    -2.4%  19.4% 
Short Term Debt (%)   30.7%  28.8%  18.2%    -0.4 p.p.  -0.4 p.p. 
Long Term Debt (%)   69.3%  71.2%  81.8%    0.1 p.p.  0.2 p.p. 
Net Debt (R$ Million)   1,919.5  1,143.8  1,260.0    10.2%  -34.4% 
Shareholders' Equity (R$ Million)   5,199.3  5,259.9  5,405.3    2.8%  4.0% 
Net Debt/Shareholders' Equity    36.9%  21.7%  23.3%    1.6 p.p.  -13.6 p.p. 
           

Brasil Telecom Participações S.A.    Page 28 of 30 

BRT MOBILE

Table 24: ARPU Calculation – Mobile Telephony

R$ Thousand    2Q06    3Q06    4Q06    1Q07    2Q07 
 
(+) Gross Revenues    374.7    494.5    590.3    541.3    609.1 
(-) Handsets    (69.5)   (65.7)   (96.4)   (52.2)   (82.7)
 
Gross Service Revenues    305.3    428.8    493.9    489.1    526.4 
 
(-) Taxes and Deductions    (102.3)   (116.8)   (142.9)   (134.8)   (145.9)
 
Net Service Revenues    203.0    311.9    351.1    354.3    380.5 
   Mobile-Mobile Interconnection Fee (Full Bill)   -    75.6    94.6    98.4    98.4 
   Other Net Service Revenues    -    236.4    256.4    255.9    282.1 
(-) Roaming    (0.8)   (0.7)   (1.1)   (1.8)   (1.8)
 
Net Quarterly Revenues    202.2    311.2    349.9    352.5    378.7 
Receita Líquida Mensal    67.4    103.7    116.6    117.5    126.2 
Average Number of Clients    2,590.2    2,911.8    3,153.7    3,514.0    3,736.1 
 
ARPU (R$)   26.0    35.6    37.0    33.4    33.8 
   

Table 25: Market Share by State – BrT Mobile

State    2Q06    3Q06    4Q06    1Q07    2Q07    D Quarter   D 12 Months 
AC    11.3%    12.2%    13.7%    15.3%    14.9%    -0.3 p.p.    3.6 p.p.
RO    17.5%    18.7%    20.2%    22.0%    22.9%    0.9 p.p.    5.3 p.p. 
DF    18.9%    20.1%    21.3%    22.7%    23.1%    0.4 p.p.    4.2 p.p. 
GO    13.2%    13.7%    14.6%    15.7%    16.0%    0.3 p.p.    2.8 p.p. 
TO    17.2%    17.2%    17.9%    19.6%    20.6%    1.0 p.p.    3.5 p.p. 
MS    9.5%    10.1%    10.8%    11.4%    11.3%    -0.1 p.p.    1.8 p.p. 
MT    10.4%    11.1%    11.9%    12.9%    13.0%    0.1 p.p.    2.6 p.p. 
PR    8.7%    9.4%    9.9%    10.4%    10.1%    -0.3 p.p.    1.4 p.p. 
SC    10.3%    10.9%    11.4%    11.9%    11.7%    -0.2 p.p.    1.4 p.p. 
RS    7.4%    8.2%    8.7%    9.3%    9.4%    0.1 p.p.    2.1 p.p. 
     
Region II    10.7%    11.4%    12.1%    12.9%    12.9%    0,0 p.p.    2.2 p.p. 
     

Brasil Telecom Participações S.A.    Page 29 of 30 

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 fully optical networks.

ARPU: Average Revenue per User, an indicator used in the telecom industry that calculates the average net revenue per user.

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

EBITDA: Earnings before Interest, Tax, Depreciation and Amortization.

GSM: Global System for Mobile communications. GSM is the most widely used technology standard by mobile operators in the world. This feature allows 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 are constant technological advances.

IOE (Interest on Equity): Shareholder remuneration option, calculated based on Shareholders’ Equity and limited, for tax deductibility effects, to the variation in long-term interest rates. The tax benefit is due to the reduction in the calculation base used for income tax and social contribution tax on net income, given that interest on equity represents a deductible expense in the application of these resources.

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

SAC: Subscriber Acquisition Cost, the average amount spent by a company to acquire a new subscriber.

TUP (Public Phones): 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.    Page 30 of 30 

 
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: July 31, 2007

 
BRASIL TELECOM PARTICIPAÇÕES S.A.
By:
/S/ Paulo Narcélio Simões Amaral
 
Name:  Paulo Narcélio Simões Amaral
Title:     Chief Financial Officer
 

 

FORWARD-LOOKING STATEMENTS

This press release may contain forward-looking statements. These statements are statements that are not historical facts, and are based on management's current view and estimates offuture economic circumstances, industry conditions, company performance and financial results. The words "anticipates", "believes", "estimates", "expects", "plans" and similar expressions, as they relate to the company, are intended to identify forward-looking statements. Statements regarding the declaration or payment of dividends, the implementation of principal operating and financing strategies and capital expenditure plans, the direction of future operations and the factors or trends affecting financial condition, liquidity or results of operations are examples of forward-looking statements. Such statements reflect the current views of management and are subject to a number of risks and uncertainties. There is no guarantee that the expected events, trends or results will actually occur. The statements are based on many assumptions and factors, including general economic and market conditions, industry conditions, and operating factors. Any changes in such assumptions or factors could cause actual results to differ materially from current expectations.