On August 19, 2004 and August 30, 2004, at the Annual Shareholders’ Meetings of Tele Nordeste Celular Participações S.A. (TND) and Tele Celular Sul Participações S.A. (TSU), respectively, the merger of TND into TSU was approved. In addition, Tele Celular Sul Participações S.A. changed its corporate name changed to TIM Participações S.A.

With the merger, TIM Participações S.A. now holds TIM Nordeste Telecomunicações S.A. (formerly held by TND), along with TIM Sul S.A. Through these two operators, the Company provides cellular communications services in six states in the Northeast of Brazil, as well as two states and one city in the Southern Region of the country.

On October 11, 2004, TIM Participações S.A. shares of stock began trading on Bovespa under the ticker name TIM PART S/A. The trading codes of former Tele Celular Sul, namely TCSL3 for common shares, and TCSL4 for preferred shares, were maintained. As for our ADRs, trading on the New York Stock Exchange (NYSE) started on October 15, 2004, keeping the ticker TSU.

As a result of the corporate restructuring, TND’s results accrued up to September 2004 were added to TIM Participações S.A. (TSU’s new corporate name) 3Q04 results, thus affecting the analysis of the quarterly information, as well as any comparisons made with information from preceding quarters.

Therefore, for the purpose of analyzing TIM Participações S.A. economic-financial performance, pro forma were prepared for the 3Q04, as if the merger had occurred on June 30, 2004, mirroring the combined results of TSU and TND. The same criterion was used for 3Q03, as if the merger had taken place on June 30, 2003 instead. The data accumulated up to September 30, 2003 are also pro forma.

TIM Participações market continues expanding markedly. The Company ended the 3rd quarter 2004 with 5,160,902 customers, 29.4% more than in the same period of 2003, of which 74.2% are   prepaid plan customers and 25.8% postpaid. The postpaid base grew by 6.4% when compared to the 3Q03.

By quarter end, 25% of the total lines were GSM, representing 33.4% and 15.9% of the South and Northeast region customers, respectively.

Net additions totaled 358,263 customers, 144.7% above the figure reached in 3Q03, represented solely by GSM lines.

Total market penetration in the combined northeast and southern regions for the quarter was estimated at 25.2%, versus 23.1% in 2Q04, below the national average penetration of 32.4%. In terms of regional performance, TIM Participações confirmed the leadership both in the South and in the Northeast. In particular, in the South the penetration was estimated at 33.2% and the Company achieved an estimated market share of 50.2% while in the Northeast the penetration was 20.7% and the market share was 42.8%.

The GSM network already covers 514 cities, meaning that the services are offered to 90% and 78% of the urban population in the South and Northeast regions, respectively. The cities covered by GSM have access to the GPRS, and, as an additional advantage the network has the EDGE technology in the whole Southern region and in part of the Northeast, enabling customers from all over Brazil to use data and multimedia.

Thanks to the EDGE technology, the mobile office is becoming a reality, with several advantages to the customers, providing business mobility. Among the advantages are: faster access to corporate and personal e-mails; file download and upload in broadband; swift Internet navigation, remote video monitoring, remote access to corporate applications (SAP, Intranet etc.). Another advantage offered to TIM EDGE customers is that there is no need for obtaining an Internet provider, since TIM EDGE network connects the customer to the Internet by itself.

TIM Participações is part of TIM group, the leading GSM cellular telecommunications operator in Brazil. Also, TIM is the first Brazilian cellular telecommunications operator to execute international GPRS/MMS/EDGE data and multimedia roaming agreements.

All these characteristics were appreciated by the market: GSM has been chosen by 76% of the new customers (gross addition) in the South and by 59% in the Northeast.

The gross service revenues were R$ 707.3 million, 21.8% above 3Q03. This increment is credited mainly to the 29.4% expansion in the lines base and the 97.4% growth in the value-added services (VAS) revenue.

Gross handset revenues in the period were R$ 163.5 million, a 66.2% increase over 3Q03, resulting from a greater cellular market growth in 2004. This quarter, the sales efforts were focused on the “Father’s Day” (celebrated in August in Brazil).

Thus, gross revenues amounted to R$ 870.8 million in the quarter, 28.2% above 3Q03.

TIM Participações Average Revenue per User (ARPU) in the quarter was R$ 34.4, compared to R$ 37.0 registered in the 3Q03. The significant growth in the lines base, specially the +40% prepaid increase YoY, combined to the late Bill & Keep adoption in the Northeast and tax increase in some States of the Northeast, resulted in such decrease. The ARPU of the South Region was R$ 34.5, a decrease of 7.3% compared to the 3Q03, while in the Northeast it was R$ 34.4, 6.6% lower than in the 3Q03.

The cost of services (including network and interconnection costs, before depreciation/ amortization and personnel) in the period amounted to R$ 115.0 million, almost stable YoY (R$112.6 million in the 3Q03), although the network and traffic expansion, thanks to the greater efficiency and the late introduction of the Bill & Keep in the Northeast.

The handset cost for the quarter was R$ 117.9 million, above the R$ 80.2 million registered in the 3Q03, because of the double volume sold (451.5 thousand handsets versus 217.3 thousand in the 3Q03). Great acceptance for GSM technology: 94% of handsets sold were GSM.

With the wireless industry market growth, the Company focused its marketing efforts on expanding its base. Marketing campaigns, targeting mainly the “Father’s Day” holiday, included subsidies and the sale of handsets on credit, plus free minutes to calls between Company customers.

In this scenario, selling expenses (before depreciation/amortization, bad debt and personnel) were R$ 108.1 million, 47.9% above the 3Q03, as a result of the gross lines addition in the period: 625,151 lines versus 367,186 lines in the 3Q03, a 70.3% increment. The marked growth in sales during the period increased basically selling expenses related to commissions and the FISTEL tax, charged on each new cell phone activation.

Subscriber Acquisition Cost (SAC) in the 3Q04 was R$ 137.8, compared to R$ 106.1 in the 3Q03, reflecting a more competitive scenario, and the costs of migration from TDMA to GSM. In 2004, the Company enlarged its retention program, including the GSM migration incentives, which at the end of September amounted 239.4 thousands migrations. Consequently, the participation of the retention cost of clients in the SAC, increased from 20% in 3Q03 to approximately 25% in the 3Q04.

General and Administrative (G&A) Expenses totaled R$ 34.3 million, versus R$ 29.9 million in the 3Q03. The increase in the quarter was mainly due to the extraordinary expenses related to the restructuring process.

Personnel expenses amounted to R$ 27.6 million, in line with the level of the 3Q03.

Bad debt expenses were R$ 15.0 million, a 32% decrease over the 3Q03, due to the reversal of R$ 8.0 million provisions, resulting from the recovery of receivables owed by others operators.

In the 3Q04, TIM Participações achieved an EBITDA – earnings before interest, tax, depreciation and amortization – of R$ 230.7 million, versus R$ 185.0 million in the 3Q03. The EBITDA margin was 35.6%, slightly higher than the 3Q03 margin of 35.3%, thanks to the efficiency achieved through innovation both in technology and internal processes. The EBITDA margin, net of handsets revenues and costs, was 44.4%, compared to 42.2% on the 3Q03 (+ 2.2 p.p.).

Depreciation and Amortization in the quarter was R$ 117.9 million, versus R$ 110.1 million in the 3Q03, a 7.1% increase originating from network expansion and technological innovation.

The EBIT – earnings before interest and tax – was R$ 112.9 million, higher than the R$ 74.9 million registered in the 3Q03.

The net financial revenue for the quarter was R$ 17.8 million, almost in the same level of the R$ 17.0 million in the 3Q03.

The consolidated net income was R$ 77.1 million, 36.8% above the 3Q03.

On September 30, 2004, our indebtedness was R$ 101.8 million, of which 60.8% consisted of short-term debts. The net cash flow at the end of the quarter was R$ 554.9 million.

Investments in the 3Q04 were R$ 191.2 million, totaling R$ 367.0 million by late September/2004, which was mainly used for the GSM network deployment.

“This press release contains forward-looking statements and estimates. Such expectations are based on a series of assumptions, and subject to the risks and uncertainties inherent to forward-looking projections and/or estimates. The results may differ materially from the expectations expressed in the forward-looking statements or estimates if one or more of the assumptions and expectations prove to be incorrect or are not realized.”