Outlook

The current situation of the telecommunications market in Brazil points out to good prospects for all the Algar Telecom's business segments. The positive results attained in 2012 evidence the correctness of Algar Telecom's strategic plan, which enables it to assure a sustainable growth.

Always ahead in terms of new technologies, Algar Telecom is undergoing an advanced stage concerning the migration of its network to NGNs (Next Generation Networks), which will enable the total traffic of voice, data and image to flow through a single network, more flexible and of higher capacity.

The constant enhancement in telecom infrastructure is crucial for the development of activities within the Company's areas of concession and authorization, in addition to enabling the expansion in the corporate clients portfolio, the Company's main driver for growth. In 2013, the company will continue expanding its operations in cities and towns along the existing backbone in order to reach at least ten new cities and strengthen the brand to increase penetration in the geographic areas in which it is already present. The inauguration of the Algar Group's headquarters in São Paulo, in 2012, alongside further inaugurations planned for 2013, are expected to contribute to this objective over the next years.

Another contributing factor to bolster the participation in the corporate market is the Clube Corporativo Prime (Prime Corporate Club), created to serve a distinguished group of clients in a personalized manner. This new commercial approach, which yielded quite positive results in 2012, is planned to be extended to a broader number of clients in 2013.

In Business Process Outsourcing and IT, the strategy is to continue investing in infrastructure and offering new customized solutions. In Complementary Businesses, Engeset, which plays an important strategic role in developing the Telecom segment, relies on an ongoing expanding addressable market. Algar Mídia, in seeking to develop its role as a significant link between small and medium companies and its target public, remains committed to develop new electronic media. Its main potential for growth lies in the exposure media segment (voice tools and monitors installed in areas of major circulation and public concentration). For 2013, it is expected to yield positive results from the unification of printing and online sales team, which acts in the updating media (newspapers) and consulting (directories).

As for the corporate governance area, 2013 will be geared towards the execution of risk mitigation plans, developed over the last two years. In terms of sustainability, Algar Telecom remains committed to becoming a Green or Environmental Conscious Company, proceeding with the initiates aimed at reducing power consumption and Greenhouse Gas Emissions, in addition to contributing to society in the cities where it operates, through the educational initiatives developed by Instituto Algar.

As important to the future as are the concerns with efficiency, productivity and corporate responsibility, one of Algar Telecom's major challenges consists in the enhancement of relationship quality for 2013. The Company continues to tread with conviction that its main competitive edge results from its capacity to provide distinguished services to its clients. To this end, it will maintain its massive investments in innovation and human talents management.