NOTES TO FINANCIAL STATEMENTS

For the nine-month period ended September 30, 2007
(Amounts expressed in thousands of Brazilian reais - R$, unless otherwise indicated)

1. OPERATIONS

Vivo Participações S/A (“Company”) - formerly Telesp Celular Participações S/A - is a publicly traded corporation which at September 30, 2007 has as controlling shareholders Brasilcel N.V. and its subsidiaries Portelcom Participações S/A, Sudestecel Participações Ltda., Avista Participações Ltda., TBS Celular Participações Ltda. and Tagilo Participações Ltda. that jointly hold (treasury shares excluded) 62.95% of the Company’s total capital.

Brasilcel N.V. is jointly controlled by Telefónica S/A (50% of total capital), PT Móveis Serviços de Telecomunicações SGPS S/A (49.999% of total capital) and Portugal Telecom SGPS S/A (0.001% of total capital).

The wholly-owned subsidiary Vivo S/A is a provider of mobile telephone services, including activities necessary or useful for the performance of such services, in accordance with authorizations granted for the areas of service described below:

The authorizations granted may be renewed just once, for a 15-year period, against a payment every two years of rates equivalent to 2% (two per cent) of revenues for the year prior to that of the payment, net of taxes and mandatory social contributions, related to the application of the Basic and Alternative Plans of Service. Vivo - RJ, Vivo - RS and Vivo - DF had their authorizations extended by Act No. 54324 of November 28, 2005; No. 59121 of June 20, 2006; and No. 59120 of June 20, 2006, respectively.

The subsidiary's business and the services it may provide are regulated by the National Telecommunications Agency (ANATEL), the regulator for telecommunications services, in accordance with Law No. 9472 of July 16, 1997 and respective regulations, decrees, decisions and complementary plans.

On February 22, 2006, the General Shareholders’ Meeting approved the absorption of shares of Tele Centro Oeste Celular Participações S/A (“TCO”) to be converted into a wholly-owned subsidiary of Vivo Participações S/A and the merger of Tele Sudeste Celular Participações S/A (“TSD”),Tele Leste Celular Participações S/A (“TLE”) and Celular "CRT" Participações S/A (“CRTPart”) into the Company, as described in the Notice of a Material Fact dated December 4, 2005.

The results of the merged companies for the period from January 1 through February 22, 2006 are posted to the Company’s results as established in the merger protocol.

Auction of share fractions

On April 19 and 24, 2006 auctions were held on the Sao Paulo Stock Exchange – BOVESPA to place again on the “Free Float” market 641,766 shares (310,366 common shares under code VIVO3 and 331,400 preferred shares under code VIVO4), corresponding to the fractions determined in the exchange of shares of Tele Sudeste Celular Participações S/A, Tele Centro Oeste Celular Participações S/A, Tele Leste Celular Participações S/A and Celular "CRT" Participações S/A for shares of Vivo Participações S/A resulting from the corporate restructuring approved by the Special Shareholders’ Meeting of February 22, 2006. The amounts determined on the sale are at the disposal of the holders of these share fractions at any branch of Banco ABN Amro Real S/A, the depositary entity of the book-entry shares of Vivo Participações S/A.

Corporate restructuring

At the Special Shareholders’ Meeting held on October 31, 2006, the merger by the wholly-owned subsidiary Global Telecom S/A of the other wholly-owned subsidiaries of Vivo Participações S/A, namely Telergipe Celular S/A, Telebahia Celular S/A, Telerj Celular S/A, Telest Celular S/A, Celular "CRT" S/A, Telesp Celular S/A and Tele Centro Oeste Celular Participações S/A, as well as of the latter’s subsidiaries Telegoias Celular S/A, Telemat Celular S/A, Telems Celular S/A, Teleron Celular S/A, Teleacre Celular S/A and Norte Brasil Telecom S/A was approved.

The implementation of the Corporate Restructuring was meant to simplify the corporate and operational structure, by unifying the general business management of the operating companies, which were concentrated in a single operating company controlled by the Company, optimizing synergies between the companies involved, following the process which began with the corporate restructuring approved at the special shareholders’ meetings held on February 22, 2006. Similarly and simultaneously with the Corporate Restructuring implementation, the name of Global Telecom S/A was changed into Vivo S/A (“Vivo”).

The merger of the subsidiaries were previously approved by the National Telecommunications Agency (ANATEL) on July 25, 2006 by the Act No. 59867, published in the Federal Official Gazette (DOU) on July 27, 2006.

By virtue of the fact that the Corporate Restructuring did not directly involve Vivo Participações S/A, and was restricted to its subsidiaries, the company’s capital and shareholders' equity as well as its shareholding structure and the rights derived from the shares it issued did not undergo any change.

Acquisitions - Telpart Participações S.A., Telemig Participações S.A. and Tele Norte Participações S.A. 
 
On August 02, 2007, in accordance with the terms of the Instruction CVM no. 358, of January 03, 2002, the Company celebrated a stock purchase agreement with Telpart Participações S.A. (Telpart ") to acquire (i) 72,581,089,368 (seventy two billion, five hundred and eighty one million, eighty nine thousand and three hundred and sixty eight) common shares and 9,699,320,342 (nine billion, six hundred and ninety nine million, three hundred twenty thousand and three hundred and forty two) preferred shares of Telemig Celular Participações S.A. (" Telemig Participações "), corresponding to 53.90% of voting capital , 4,27% of non-voting capital  and 22,72% of total capital; and (ii) 64,633,961,594 (Sixty four billion, six hundred and thirty three million, nine hundred and sixty one thousand and five hundred ninety four) common shares and 185,778,351 (one hundred and eighty five million, seven hundred and seventy eight thousand and three hundred and fifty one) preferred shares of Tele Norte Celular Participações S.A. (" Tele Norte Participações "), corresponding to 51,86% of voting capital , 0,09% of non-voting capital  and 19,34% of  total capital (the Acquisition "). Telemig Participações is the controlling shareholder of Telemig Celular S.A. ( "Telemig Celular”), which is  the SMP provider in  Area 4 of  Region 1 of the General Plan of Authorizations of SMP, that covers the State of Minas Gerais, and to Tele Norte Participações is the controlling shareholder of the Amazônia Celulat S.A. (" Amazônia Celular "), which is the mobile service provider  of SMP in the Area 8 of the Region 1 of the General Plan of Authorizations of SMP, that embraces States of Amazonas, Roraima, Amapá, Pará and Maranhão.  
 
The ratification of the sale and purchase agreement was approved by the general meetings of shareholders of the Company and of Telpart. The conclusion of the Acquisition (“Closing ") is subjected to certain conditions precedent set forth in the stock purchase agreement, including, without limitation, the approval for the “National Agency for Telecomunications- ANATEL”, the Brazilian Communications regulator. The Acquisition was submitted to “Conselho Administrativo de Direito Econômico- CADE”, the Brazilian Antitrust Commission.
 
The price agreed in the stock purchase agreement is of R$1,213,100,000.00 (the " purchasing price "), that corresponds to: (i) R$1,093,090,107.00 for the shares held by Telemig Participações in Telpart, represented R$14.21 per lot of 1,000 common shares of Telemig Participações and R$6.39 per lot of 1,000 preferred shares of Telemig Participações and, (ii) R$120,009,893.00 for the shares held byTele Norte Participações owned by Telpart, represented by R$1.85 per lot of 1,000 common shares of Tele Norte Participações and R$0.66 per lot of 1,000 preferred shares of Tele Norte Participações. The Purchase Prices to be paid by Vivo Participações implies R$2,488.29 for common share of Telemig Celular and of R$56.72 for lot of 1,000 common shares of the Amazônia Celular. The references to the Purchase Price regarding  each type of shares relate to the prices for lots of 1,000 shares, in order to beconsistent with the form such shares are currently trade in market (except with respect to Telemig Celular shares, which are traded on a per share basis). 
 
From the execution of the stock purchase agreement until the date of the Closing, the Purchased Price will accrue by the Brazilian daily – CDI rate  and will be subject to certain adjustments as contemplated in the stock purchase agreement. Moreover, the prices for share mentioned before will be further adjusted to reflect the result of ongoing  reverse split  processes approved at shareholders’ meeting of Telemig Participações, Tele Norte Participações and  Amazônia Celular all held on July 12, 2007.
 
Acquisition of a spectrum in Tender 001/2007/SPV-ANATEL

On September 25, 2007, the Company,  through its  subsidiary VIVO  S.A. (Vivo”) was the winning bidder of the Band L lots, except for lot 16 (area of Londrina-PR) and of lot 20 (North of Brazil), after the opening of the proposals of prices carried through in that date in the headquarters of the ANATEL. Band L comprises lots in the frequency range from 1895 to 1900 Mhz and from 1975 to 1980 Mhz, with 5 + 5 Mhz width, in all the regions served by the SMP. Accordingly, Vivo managed to complete its last coverage gap and will be soon operating in the whole Brazilian territory.

In order to achieve this benchmark, Vivo offered 50.60% average premium over the minimum price set in the auction call notice. Vivo’s offering was around R$ 169.7 million for all Band L lots acquired. However, pursuant to the rules provided for in the auction call notice, the price to be paid refers to the remaining term of the pre-existing authorizations for each lot acquired, which term is always counted as from the date of execution of the Term of Authorization referring to this bidding process .Therefore, the price to be paid by Vivo shall be around R$ 85.3 million, with a down payment of 10% (R$ 8.5 million). Such down payment is to be made at the time of the execution of the Terms of Authorization and the balance will be payable in 6 annual installments, with a grace period of 3 years, adjusted to the general price index (IGP-DI) rate plus 1% monthly. Even on September 30, 2007, Vivo had not signed the term related of authorization.

2. PRESENTATION OF FINANCIAL STATEMENTS

Company and consolidated Quarterly Information ("ITR") are presented in thousands of Brazilian Reais (unless indicated otherwise) and have been prepared in accordance with accounting practices adopted in Brazil, considering Brazil’s corporate legislation, norms applicable to concessionaries of public telecommunications services and accounting procedures established by the Brazilian Securities Commission (CVM).

This Quarterly Information was prepared following principles, practices and criteria consistent with those adopted in the preparation of previous fiscal year's financial statements and should be analyzed in conjunction with such statements.

Intercompany asset and liability, revenue and expense balances were eliminated on consolidation.

The interim financial statements at September 30, 2006 and June 30, 2007 were reclassified, when applicable, for comparison purposes.

The reconciliation between Company's and consolidated loss for the nine-month periods ended September 30, 2007 and 2006 is as follows:

The short-term investments refer mostly to highly-liquid fixed income investments, indexed to the variation of  Interbank Deposit Certificates ("CDI").

At September 30, 2007, the subsidiary had short-term investments offered as collateral in lawsuits in the amount of R$ 27,894 (R$ 39,574 as of June 30, 2007).

A portion of the balance of short-term investments has been offered as collateral for loans and financing (Note 15e), in the amount of R$ 26,518 as of September 30, 2007 (R$24,992 as of June 30, 2007).

No client accounts for more than 10% of trade accounts receivable, net as of September 30, 2007 and June 30, 2006.

At September 30, 2007 the balance of accounts receivable includes R$ 249,936 (R$ 372,322 as of June 30, 2007) related to co-billing with other operating companies, the amounts of which were determined on the basis of statements of commitment, since contracts have not yet been signed by the parties. Pending matters related to the definition of responsibility for losses resulting from fraud have not yet been resolved, and depend upon decision by the regulating agency and agreement between the parties.

The changes in the allowance for doubtful accounts are as follows:

The breakdown of deferred income and social contribution taxes are as follows:

The deferred taxes were set up assuming its future realization as follows:

a)   Income and social contribution tax loss carryforwards : to be offset up to 30% of the tax bases determined for subsequent years.

b)   Merged tax credit : represented by the net balance of goodwill and the provision for maintaining the integrity of the net equity (note 6.2). Its conversion occurs proportionately to the amortization of the goodwill in its subsidiary, over a period of 5 to 10 years. Studies by outside consultants used in the corporate restructuring process support the recovery of the value within this period.

c)   Temporary differences : realization will occur upon payment of the provisions, actual loss on doubtful debt or sale of inventories.

At December 31, 2006 the Company prepared technical feasibility studies, approved by its Board, which indicated the full recovery of recognized deferred tax amounts, as defined by CVM instruction No. 371.

During the quarter ended September 30, 2007, no material fact occurred that indicated limitations to the full recovery of deferred taxes.

6.2 .Tax benefits – Corporate Restructuring

The goodwill paid when Company went private and when its subsidiaries were acquired was transferred by the acquiring to the acquired companies.

Prior to these transfers, provisions were recorded for the maintenance of the subsidiary's net equity and, consequently, the net assets merged represent essentially the tax advantage resulting from the deduction of the goodwill merged.

Company’s and its subsidiary’s accounting records for corporate and tax purposes include specific accounts related to merged goodwill and provision and respective amortization, reversal and tax credit, the balances of which are as follows: 

The changes during the nine-month periods ended September 30 are as follows:

Proportionately to the effective realization of tax benefits, relevant amount will be absorbed by capital in favor of controlling shareholders, while the other shareholders will be assured of the right of first refusal. The resources originating from the exercise of this right will be paid to controlling shareholders.

As of December 31, 2006, R$ 305,531 referring to tax benefits realized until December 31, 2005 were capitalized, of which R$ 194,277 corresponding to Vivo Participações S/A with the issueance of shares and R$ 111,254 corresponding to Tele Centro Oeste Celular Participações S/A without issuance of shares.

9. INVESTMENTS                                                                         

a)   Investments in subsidiary

     As of September 30, 2007, Vivo S.A. is a wholly-owned subsidiary of the Company.

b)   Number of shares

      As of September 30, 2007, the Company holds 3,810,478 common shares of Vivo S/A

c)   Information on subsidiaries

d)  Breakdown and changes

The balance of Company's investments includes interest in subsidiaries' equity, goodwill, advances for future capital increase and valuation allowance, as well as other investments, as shown below:

(a) Allowance set up at December 31, 2001 and 2002 to recognize permanent losses on goodwill, as a consequence of losses accumulated at those dates by subsidiary Global Telecom.

The movement of the investments in subsidiaries for the nine periods ended in September 30, as follow as:

d.2) Goodwill on the acquisition of investments, net

In the ninth period ended on September 30, 2007, the subsidiary  capitalized  financial expenses incurred on loans that are financing the works in process in the amount of R$2,476.

At September 30, 2007, the subsidiary had property and equipment offered as guarantee collaterals in lawsuits in the amount of R$ 92,082 (R$ 139,205 as of June 30, 2007), as shown below:

As of December, 2006, the subsidiary started offering its clients services based on the Global System for Mobile Communications (GSM) technology. Management understands that the adoption of GSM will have no impact on amounts previously invested in the other technologies of its network.

(a) As per contractual periods.

(a) Amounts to be transferred refer to VC2, VC3 and roaming charges, invoiced to our clients and passed on to the long distance operating companies.