FOR IMMEDIATE RELEASE TELE NORDESTE CELULAR PARTICIPAÇÕES S.A. ANNOUNCES FIRST QUARTER 2000 RESULTS

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1 FOR IMMEDIATE RELEASE Contacts: Tele Nordeste Celular Participações S.A. Thomson Financial IR Mario Gomes Peter Firestein Isabel Vieira Fabíola Almeida Octavio Muniz TELE NORDESTE CELULAR PARTICIPAÇÕES S.A. ANNOUNCES FIRST QUARTER 2000 RESULTS Recife, Brazil (May 2, 2000) Tele Nordeste Celular Participações S.A. (NYSE: TND) ( Tele Nordeste, or The Company ), the holding company controlling the operating companies serving Band A cellular telecommunication customers in the states of Piauí, Ceará, Rio Grande do Norte, Paraíba, Pernambuco and Alagoas, announced today its results for the first quarter of 2000 in accordance with Brazilian GAAP. The translation to US dollars has been presented solely for the convenience of the reader. This conversion does not imply that reais amounts actually represent such US dollar amounts or may be converted to US dollars at the rate indicated. The US dollar amounts have been converted from reais at the commercial selling rate published by the Central Bank of Brazil at March 31, 2000, which was R$1.75 to US$1.00. Operational Highlights Marketing activities during the first quarter 2000 resulted in the net addition of 125,340 customers, representing a 10.5% increase compared to the customer base at December 31, The Company had 1.3 million customers at March 31, 2000, of which 886,000 (67.5%) were contract customers and 427,000 (32.5%) were prepaid customers. Postpaid and prepaid churn for the quarter was 4.3% and 5.5%, respectively. The market share at the end of the first quarter of 2000 was estimated at 69%. Financial Highlights Tele Nordeste s net income for the first quarter of 2000 was R$11.2 million (US$6.4 million) or R$0.033 (US$0.019) per thousand shares, compared to R$13.6 million (US$7.8 million) for the first quarter Consolidated net operating revenues for the first quarter of 2000 reached R$215.5 million (US$123.1 million), compared to R$141.7 million (US$80.9 million) for the first quarter of The Company reported consolidated EBITDA of R$74.9 million (US$42.8 million) for the first quarter of 2000, representing a 34.8% EBITDA margin over net operating revenues, compared to the R$63.8 million (US$36.5 million) EBITDA and 45.4% EBITDA margin reported for the first quarter of EBIT for the first quarter of 2000 increased to R$48.9 million (US$27.9 million) while EBIT margin dropped to 22.7% compared to EBIT of 1

2 R$35.5 million (US$20.3 million) and EBIT margin of 25.5% reported for the first quarter of Select Consolidated Financial Data (in thousands of Reais) First Quarter % Inc Revenue - Usage charges 131,388 94, Monthly subscription payments 52,194 31, Network usage charges 61,511 39, Sale of goods and other revenues 34,123 12, Subtotal 279, , Value added and other indirect taxes (64,738) (38,045) 70.2 Net Operating Revenue 214, , Cost of Services and Goods Sold - Depreciation and amortization 24,357 27, Personnel 2, Material and services 1,529 5, Lease of circuits and related costs 34,119 31, Leasing and insurance 2,222 1, Handsets and accessories 31,721 6, Fistel and others 6,204 4, Subtotal 102,895 78, Gross Profit 111,583 62, Net operating revenue for the first quarter of 2000 increased 52.6% when compared with the same quarter of the previous year. This is primarily due to the substantial increase in the average number of customers, which reached 92.1% quarter-over-quarter (from 667,000 to 1,283,000), and the increase in sales of handsets. Excluding sales of handsets, net operating revenues increased 45% quarter-over-quarter. The interconnection rate increased by 15% on December 1, 1999, and the VC1 rate increased by 12% as of February 1, These two rate increases have positively impacted net revenues for the first quarter of The lease of circuits and related costs increase of 8.9% reflects higher usage of other operators network by our clients, offset by discounts on leased circuits as compared to the first quarter of Other costs reflect the overall increase in operations. 2

3 Operating Expenses (in thousands of Reais) Operating expenses First Quarter % Inc - Selling expenses 46,565 16, % - General and administrative expenses 18,247 12,047 51% - Other operating income (366) (1,822) Subtotal 64,446 27, % Net financial expenses 20,973 6, % Total operating expenses 85,419 33, % Net operating expenses increased 154% compared to the same quarter of the prior year, from R$33.6 (US$19.2 million) in 1999, to R$85.4 million (US$48.8 million) in Selling expenses in 2000 reflect the more intense marketing and distribution activities and higher bad debt expenses. Consolidated bad debt expenses for the first quarter of 2000 amounted to R$20.7 million (US$11.8 million), representing 7.4% of gross revenue, compared with R$6.2 million for the first quarter of 1999, which represented 3.4% of gross revenue for that quarter. The Company has taken measures to reduce bad debt expenses, following the normalization of the new billing system. These measures include the outsourcing of collection activities as well as the disconnection and/or migration to the prepaid system. General and administrative expenses in 2000 were higher because of the increase in headcount when compared to the same period in 1999, when most of the administrative positions had not been filled. Financing expenses reflect the higher debt levels when compared to the first quarter of 2000 and financing costs related to sales of handsets in installments. Consolidated Statistics Contract customers at March 31 st 886, ,739 Prepaid customers at March 31 st 427,167 - Total customers 1,313, ,739 Growth over same quarter of the previous year 90.4% 48.5% Estimated population of region (in millions) Cellular penetration at March 31 st 7.2% 3.3% Average monthly incoming minutes of use per customer during first quarter Average monthly outgoing minutes of use per customer during first quarter The blended average revenue per user (ARPU), net of taxes, for the first quarter of 2000, was R$51 per month, compared to R$67 per month for the first quarter of Postpaid and prepaid ARPU were R$63 and R$24, respectively, for the first quarter of

4 Competition The Company estimates that its market share at the end of the first quarter of 2000 was approximately 69%. General handset subsidies have been discontinued as of March 1, As a result, the immediate effect was a 44% reduction in gross additions of contract and prepaid customers in March. New tariff plans are being offered to contract customers, with one-year contracts, which may include some type of subsidy on the handset price. Management understands that the retention of heavy (contract) users is the key to profitability, therefore, the marketing and distribution efforts have now been redirected towards those clients. Balance Sheet Consolidated debt at March 31, 2000, was R$377 million (US$215 million). This balance was fully comprised of Real-denominated debt, following the Company s policy of no exposure to currency risk. The bad debt provision amounted to R$30.9 million (US$17.6 million), representing 15% of accounts receivable at March 31, Capital Expenditures During the first three months of 2000, Tele Nordeste and its subsidiaries invested R$36.1 million (US$20.6 million), mainly on network digitalization. The capex program for 2000 amounts to R$215 million and includes enhancements to the Company s systems, new services and Internet facilities. Human Resources The number of employees at March 31, 2000, totaled 1,277, including full-time, interns and temporary employees. The customer/employee ratio increased from 711 at March 31, 1999, to 1,028 at March 31, Subsequent Events The shareholders of the operating companies approved, at their respective Annual Shareholders Meetings held between April 24-26, 2000, the financial statements for 1999 as well as the payment of interest on equity (dividends) as proposed by the respective management of Telasa Celular, Telpa Celular, Teleceará Celular and Telepisa Celular.. Tele Nordeste s shareholders approved, at the Annual Shareholders Meeting held on April 27, 2000, the financial statements for 1999 and the payment of interest on equity (dividends) in the amount of R$8.4 million, net of withholding income tax (R$ per 1,000 shares). At the Extraordinary Shareholders Meeting held on April 28, 2000, the shareholders of Tele Nordeste approved the merger of 1B2B Participações S.A., the current controlling shareholder, into the Company, according to the Relevant Fact published on April 13, B2B Participações S.A. was formed by Bitel Participações S.A., the controlling shareholder, to allow the transfer to the Company, and later to its operating companies, of the goodwill premium paid by Bitel. This merger will be followed by another proposal to merge the six operating companies, once the necessary approval has been obtained from ANATEL. The Relevant Fact is accessible at our web site: or by calling the Company s contacts mentioned above. *****Tables to Follow***** 4

5 Tele Nordeste Celular Participações S.A. Balance sheets March 31, 2000, and December 31, 1999 (In thousands of reais) Parent Company Consolidated Parent Company Consolidated Assets Liabilities, Minority Interest and Shareholders' Equity Current assets Current liabilities Cash equivalents 1, ,624 7,768 Accounts payable to suppliers 504 1,079 76,898 94,886 Trade accounts receivable , ,542 Financing and loans - 332, ,586 Inventories ,578 28,284 Taxes payable 594 1,002 45,796 45,917 Telecommunications companies ,462 32,491 Salaries and vacation pay 1, ,885 4,313 Subsidiaries 15,991 12,039 Subsidiaries 10,641 10, Taxes and contributions receivable 2,441 3,890 14,758 49,494 Telecommunications companies 3 3 9,843 7,520 Deferred income and social contribution taxes ,677 18,088 Dividends and interest on shareholders' equity Dividends and interest on shareholders' equity - Law,9.249/95 10,373 10,340 4,401 16,751 - Receivable according to Law 9,249/95 9,632 9, Other liabilities 376 3,502 32,161 25,050 Loan to subsidiaries 11,241 18, Prepaid expenses ,449 23,698 26, , ,023 Other rights 1,597 2,472 67,505 12,317 Noncurrent assets 42,936 47, , ,433 Tax incentives - - 2,746 2,679 Noncurrent liabilities Financing and loans ,376 53,278 Other liabilities ,469 53,368 Permanent assets Minority interest ,176 97,650 Investments 341, , Property, plant and equipment 4,901 4, , ,020 Shareholders' equity 346, , , ,020 Capital stock 108, , , ,943 Profit reserves 178, , , ,922 Retained profits 77,385 66,226 77,386 66, , , , , , ,866 1,019, , , ,866 1,019, ,132

6 Tele Nordeste Celular Participações S.A. Income Statement For the quarters ended March 31, 2000, and March 31, 1999 (In thousands of reais) Parent Company Consolidated Revenues Telecommunications services and sale of goods , ,579 Deductions Sales Taxes (ICMS, PIS and Cofins) - - (64,739) (38,045) Net revenues , ,534 Cost of goods sold and services rendered - - (102,895) (78,063) Gross profit ,582 62,471 Operating revenues (expenses) Selling expenses - - (46,565) (16,894) Administrative and general expenses (1,807) (3,252) (18,247) (12,047) Financial expenses (57) (690) (25,005) (13,907) Financial income 734 2,320 4,032 7,440 Equity in income of subsidiaries 11,908 15, Other operating income ,056 Other operating expenses (74) - (451) (1,234) Operating income (loss) 10,704 13,595 26,164 28,885 Nonoperating income Nonoperating expenses (198) (2,549) Income before income and social contribution taxes 10,721 13,595 26,271 26,337 Income and social contribution taxes (11,590) (8,278) Net income before minority interest 11,160 13,595 14,681 18,059 Minority interest - - (3,521) (4,464) Net income for the quarter 11,160 13,595 11,160 13,595 Net income per lot of a thousand shares - R$ Number of shares at March 31 (thousands) 334,399, ,399,028