VIVO, SOUTHERN HEMISPHERE’S LARGEST WIRELESS GROUP ANNOUNCES FOURTH QUARTER 2003 CONSOLIDATED EARNINGS OF TELE SUDESTE CELULAR PARTICIPAÇÕES S.A.

TELE SUDESTE CELULAR PARTICIPAÇÕES S.A.

• In 4Q03, expenses regarding the financial adjustment of contingency provisions were written as financial expenses. This effect was also incorporated in the 3Q03 numbers for comparative purposes.

• The financial statements referring to December 31, 2003 and December 31, 2002 were reclassified when applicable, for comparative purposes.

• In 4Q03, the PIS and COFINS items were reclassified from financial expenses to operating expenses. This effect was also incorporated in the numbers pertaining to 2002 for comparative purposes.

• On July 6th, 2003, Personal Mobile Service (SMP) carriers had to introduce the Carrier Selection Parameter (CSP) facility for long distance calls. TCO carriers no longer received VC2 and VC3 revenues and began to receive interconnection revenue when their networks were used for these calls.

• Furthermore, in compliance with Anatel regulations, Bill & Keep rules were used for interconnection charges as of July 2003. Therefore remuneration for use of networks between SMP (mobile service) carriers will only apply if traffic between them exceeds 55%, which will impact revenue and interconnection cost without, however, significantly affecting EBITDA.

TSD is one of the companies that together with Telesp Celular Participações S.A., Tele Leste Celular Participações S.A., Tele Sudeste Celular Participações S.A. and Celular CRT Participações S.A., comprises the assets of the Joint Venture between Telefónica Móviles and Portugal Telecom. On April 13, 2003, the “VIVO” brand was launched to create one single image for the Group's operations, thus evincing its coverage and capillarity in the country and its business strategy. The brand is now Top of Mind in the Brazilian market.

• 33.709 million clients, an increase of 6.5% and 7.4% compared to 3Q03 and 4Q02, respectively.

• Intensive sales activity led to 226,000 new additions in 4Q03.

• TSD's post-paid clients base grew 6.4% in relation to 2002, and its pre-paid clients base increased 7.8%.

• In 4Q03, 78.4% of the total clients base were potential WAP and 1xRTT services users.

• Net operating revenue was R$ 1,892.5 million which was 2.4% up on 2002.

• 1.8% growth in net operating revenue from services in 2003 compared to 2002.

• The EBITDA increased 12.3% in 2003 and the EBITDA margin grew 35.8% in the year, which represents an increase of 3.1 percentage points compared to 2002.

• The Net Profit was R$ 156.2 million in 2003, 11.3% higher than in 2002.

• Operating cash flow was R$ 420.6 million in 2003, which is 80.3% higher than in 2002, showing that the company generates sufficient cash flow to maintain its investments.

• In 4Q03, TSD took a 35.7% share of net additions in the in the states in which it operates. Four wireless operators operate in the same states as TSD. Source: ANATEL.

• TSD's clients base expanded 6.5% and 7.4% in relation to 3Q03 and 4Q02, respectively.

• By the end of 2003, there was a 97.9% handsets digitization rate. The numbers of analog handsets declined by 16.1% and 53.6% in relation to 3Q03 and 4Q02 respectively.

• The substantial number of gross additions, many of whom will only start to generate revenue in 2004, impacted blended ARPU, remained practically stable in relation to 3Q03.

• Due to the company's managerial efficiency, productivity gains were 6.5% and 26.9% in relation to 3Q03 and 4Q02 respectively.

• TSD employs CDMA and 1xRTT digital technologies to provide wireless telephony services.

• By December 31, 2003, the 1xRTT service covered the Rio de Janeiro metropolitan region from Galeão Airport to Recreio dos Bandeirantes, the center of Niterói, Icaraí and Macaé. In the state of Espírito Santo the 1xRTT service covered the city of Vitória, Vila Velha, Cariacica, Serra and Colatina.

TSD's net operating revenue from service reached R$ 1,645.9 million in 2003, which was 1.8% higher than in 2002. The company's net operating revenue from service in 4Q03 grew 3.2% in relation to 3Q03. This growth was mainly due to increased local outgoing traffic.

TSD's net operating revenue from sales of goods amounted to R$ 246.6 million in 2003, which is 6.9% up on 2002. In 4Q03, the company's net operating revenue from sales of goods grew 55.7% in relation to 3Q03, due to intensive sales activity in the period.

TSD's subscriber and usage revenue in 2003 was R$ 1,279.9 million, which was 6.1% higher than in 2002. In 4Q03, subscriber and usage revenue grew 2.2% compared with 3Q03 mainly due to greater usage of services.

In 2003, TSD's interconnection revenue in 2003 increased 1.9% compared to 2002, in spite of the effects of the Bill & Keep rules, as of 3Q03, which represented 3,5% of the net operating revenue from services.

Other revenues from services showed substantial growth in 2003 with a total of R$ 42.1 million. Revenue from data services accounted for 31.9% of revenues from other services in 4Q03 due to nationwide campaigns addressed to users of SMS (Short Message Service), WAP and 1xRTT services.

In 2003, TSD’s cost of personnel increased 10.0% in relation to 2002 due to the contract signed in December 2003, retroactive to November 1st, which saw a linear increase of 7.5% in line with inflation. Furthermore, the Cost of Personnel item was impacted by end-year bonus payments.

Cost of services provided by TSD were reduced by 3.4% in 4Q03 and was mainly affected by lower costs of third-party services and means of connection due to the installation of the company's own backbone infrastructure.

TSD's Cost of Goods Sold in 4Q03 rose 63.6% in relation to 3Q03 due to intensive sales activity, which led to growth of almost 300% in net additions for the same period.

Commercialization of services expenses increased 12.4% in relation to 3Q03 due mainly to higher marketing expenses during Christmas Campaigns.

Bad debt was 1.8% of gross income in 4Q03 and has remained low due to constant efforts made to maintain the quality of the post-paid clients base, and the “VIVO” group's strategy for controlling credit to resellers and corporate clients.

Cost-restriction policies in 2003 led to an increase of 12.3% in EBITDA in relation to 2002. In 4Q03, TSD's EBITDA reached R$ 177.8 million and its EBITDA margin for the period was 35.7%.

Depreciation and Amortization increased 15.7% in 2003 in relation to 2002. As of December 2002, the working life of exchange equipment was reduced to 18 months in an attempt to adapt to operating realities, and this effect led to an increase of R$ 2.7 million.

TSD's Net Financial Revenue for 2003 mainly reflected variations in the exchange rate of the Brazilian real against the US dollar compared with 2002, and the company posted financial expense of R$ 57.5 million. TSD reported negative Financial Income of R$ 36.7 million in 4Q03 against a positive number of R$ 3.9 million for 3Q03. This was mainly due to the distribution of interest on own capital in the quarter.

TSD's loans and financing debt on December 31, 2003 amounted to R$ 219.0 million (against R$ 460.5 million on December 31, 2002). The debt is 100% denominated in foreign currency and fully covered by hedging transactions. This debt is offset by cash in hand and financial investments (R$ 388.4 million) and by derivatives assets and liabilities (R$ 10.8 million payables), resulting in net debt of R$ 158.6 million.

During 2003, TSD invested R$ 257.7 million in Property, Plant and Equipment, mainly for providing new telecommunications services and developing its own transmission routes.

In accordance with Article 196 of Law No. 6404/76, at the Shareholders General Meeting, management will be submitting a capital budget proposal for the company and its controlled companies for the 2004 financial year in the amount of R$ 267.8 million.

The positive Operating Cash Flow demonstrates that TSD generates enough resources with its operation to afford its capital expenditure program. Much of the year's capital investment was concentrated in 4Q03 with a fall in Operating Cash Flow in relation to 3Q03. However, on comparing 2003 with 2002, Operating Cash Flow showed an increase of 80.3%, reaching R$ 420.6 million.

On February 6th, 2004, Anatel authorized a maximum increase of 6.99% for the Basic Plan basket of tariffs in all states covered by TSD. The Company will be analyzing the situation in the market. Should it decide to pass on the increase the new tariffs will be announced in the publications of record of its carriers and the major newspapers. Furthermore, Anatel authorized an increase in VU-M (interconnection charge) of 5.783% for both TSD carriers. These increases were published in the Official Federal Gazette on February 9th, 2004. The new VU-M charges are shown in the table below:

On February 12, 2004, TSD published the approval by its Administrative Council of an increase in TCO’s capital stock. The fiscal benefit resulting from the amortization of the premium due to this corporate restructuring – which took place in three phases in October and November 2002, involving the Company, its controlled companies and its controlling companies – represents credit for its controlling companies, Sudestecel Participações S.A. and Tagilo Participações Ltda. This credit shall be used to increase the Company’s capital stock. The total value of the capital stock increase and the subscription of shares is R$ 86,490,058.47, with the issue of 16,411,775,801 new common shares, with no par value, at a subscription price of R$ 5.27 per 1,000 common shares and maintaining the preferential subscription rights established in article 171 of Law number 6,404/76. The subscription period begins on February 13, 2004 and ends on March 15, 2004. Any funds resulting from the exercise of preferential rights will be credited to Sudestecel Participações S.A. and Tagilo Participações Ltda.

Financial Terms:

EBIT – Operating result before interest and taxes.
EBITDA – Operating result before interest, taxes, depreciation and amortization.
EBITDA Margin = EBITDA / Net Operating Income.
CAPEX – Capital Expenditure
Operating Cash Flow = Accrued EBITDA – Accrued CAPEX.
Subsidy = (net income from goods – cost of goods sold + discounts given by suppliers) / gross additions
PDD – Provision for doubtful debtors. A concept in accounting that measures the provision made for accounts receivable due for more than 90 days.
Net debt = Gross debt – cash – financial investments – securities – active derivative transactions + passive derivative transactions
Debt / EBITDA – Index which evaluates the Company’s ability to pay its debt with the generation of operating cash in a one-year period.
NE – Net Equity
Net debt/ (Net debt + NE) – Index which measures the Company’s financial leverage.
Current Capital (Short-term capital) = Current assets – Current liabilities
Working capital = Current Capital – Net Debt

Technology and Services

CDMA – (Code Division Multiple Access) – Aerial interface technology for cellular networks based on spectral spreading of the radio signal and channel division in the code domain.
1XRTT – (1x Radio Transmission Technology) – 2.5G technology, an evolution of CDMA technology which represents one of the steps towards 3G technology and allows data transmission at up to 144 kbps and the offer of a scope of new services.
ZAP – A service which allows quick wireless access to the Internet through a computer, notebook or palmtop, using the CDMA 1XRTT technology.
WAP –Wireless Application Protocol is an open and standardized protocol started in 1997 which allows access to Internet servers through specific equipment, a WAP Gateway at the carrier, and WAP browsers in customers’ handsets. WAP supports a specific language (WML) and specific applications ( WML script).
SMS – Short Message Service – Short text message service for cellular handsets, allowing customers to send and receive alphanumerical messages.

Operating indicators:

Customers – Number of wireless lines in service.
Gross additions – Total of new customers acquired in the period.
Net additions = Gross Additions – Reduction in number of customers
Market share = Company’s total number of customers / number of customers in its operating area
Net additions market share: participation of estimated net additions in the operating area.
Market penetration = Company’s total number of customers + estimated number of customers of competitors) / each 100 inhabitants in the Company’s operating area
Churn rate – Percentage measuring the number of inactive customers during a specific time period, relative to the average number of active customers in the same period = number of customers lost in the period / ((customers at the beginning of the period + customers at the end of the period) / 2)
ARPU (Average Revenue per User) – net income from services per month / monthly average of customers in the period
Blended ARPU – ARPU of the total customer base (contract + postpaid)
Contract ARPU – ARPU of postpaid service users
Prepaid ARPU – ARPU of prepaid service users
MOU (minutes of use) – monthly average, in minutes, of traffic per customer = (Total number of outgoing minutes + incoming minutes) / monthly average of customers in the period
Contract MOU – MOU of postpaid service users
Pretpaid MOU – MOU of prepaid service users
SAC – cost of acquisition per customer = (70% marketing expenses + costs of the distribution network + handset subsidies) / gross additions.
Productivity = number of customers / permanent employees