• Christmas campaign focused on high value market segments.

• TSD’s customer base rose 8.3% over 4Q04, reaching 4,740 thousand customers.

• In the year-to-year comparison, the postpaid customer base reached 31.1% of all customers, having increased by 17.2%, a result of the efforts for acquisition of customers in this market segment.

• Acquisition mix in 2005 presented an increase in the postpaid segment which represented 59.1% of net adds, 43.7 p.p. up when compared to 2004.

• SAC of R$148, a 4.9% reduction in the quarter and 16.6% reduction in relation to 4Q04.

• ARPU recorded 12.1% growth over 3Q05 and 5.5% over 4Q04. Postpaid ARPU grew 13.5% and 10.3% in the same periods.

• Increase of service revenue of 12.4% over 3Q05 and 18.0% over 4Q04. Increase of 9.9% in the accumulated numbers for 2005.

• Data revenues grew 97.0% over 4Q04, reaching 4.9% of the net service revenue in 4Q05. Increase of 128.9% in 2005.

• Launching of new corporate solutions focused on high speed in data transmission, such as Smart Mail 3G and VIVO ZAP 3G.

• Accumulated EBITDA in 2005 of R$ 514.1 million, representing a margin of 24.7%. Increase of 4.4 p.p. in the margin in 4Q05 when compared to 4Q04, recording R$ 138.3 million.

• 100% coverage in the municipalities within its area of operation with CDMA 1xRTT digital technology and use of CDMA2000 1xEV-DO technology in the city of Rio de Janeiro.

• Net Profit of R$ 111.2 million in 2005, 19.8% higher when compared to 2004.

• Operating Cash Flow reached the positive value of R$ 217 million in 2005.

• Financial Income of R$ 26.8 million, 370.2% higher when compared to 2004.

VIVO

Vivo launched a campaign in October 2005, called “Vivo e Você na Copa” (Vivo and You in the World Soccer Cup), which is focused on the current customer base (post and prepaid), aiming at increasing profitability. Such campaign will take 75 customers with companion to watch Brazil’s games in the 2006 World Soccer Cup, being valid until March 31, 2006. To end the year, Vivo granted an unprecedented and quite attractive benefit, easily understood by the customers, which was intended to exploit freedom in using wireless phones with the “Natal Bônus Livre” (Free Bonus Christmas), a bonus of R$ 40/month (during 6 months) for local calls to any direction (wireless or fixed telephone), conditioned upon monthly recharge and payment on time of postpaid bills, in addition to a data package (SMS and MMS)

On December 31, 2005, TSD had more than 50 own purchase points, in addition to an efficient network of accredited dealers, whether exclusive or not, totaling more than 850 points of purchase, which are able to market services and cellular handsets, thus also making the Company a leader in number of distribution channels.

VIVO launched the Corporate 3G, in the cities of São Paulo, Rio de Janeiro and Curitiba, with the purpose of increasing the options already made available by it to corporate clients. An example of such service is the Vivo Smart Mail, which allows personal information to be accessed, at real time, from a PDA. Another innovation is the Globalmoto, first world cell phone of a Brazilian operator that works automatically in places where CDMA is not applicable achieving international roaming over more than 170 countries.

The 2005 and 2004 accumulated figures correspond to the values recorded in the twelve-month period ended on December 31 of the above mentioned years.

Some information disclosed for 4Q04, 3Q05 and accumulated 2004 were re-classified, as applicable, for comparison purposes. Disclosed totals are subject to differences, due to rounding-up procedures.

• Maintenance of market leadership as a result of the increase in the customer base by 8.3% in relation to 4Q04, recording 4,740 thousand customers, with 17.2% growth of postpaid customers, and net additions in this segment of 217 thousand customers in 2005, an important increase in relation to 2004.
  
  
• SAC decreased by 16.6% and 4.9% in relation to 4Q04 and 3Q05, respectively, due to reduction in the total subsidy, at the same time keeping the efforts for customer retention, especially those of mid and high end.
  
  
• The blended ARPU of R$ 35.0 recorded 12.1% and 5.5% increases in relation to 3Q05 and 4Q04, respectively, as a result, among other factors, of the increase in the postpaid outgoing ARPU and changes in the customer mix (postpaid customer base grew 3.9% and 17.2%, representing 31.1% of the customer base in the 4Q05 and 30.6% and 28.8% in the 3Q05 and 4Q04, respectively. The 5.7% reduction in the accumulated total for the year is due, mainly, to the reduction in the inbound ARPU, due to the reduction in the fixed-mobile traffic.
  
  
• Total MOU increased by 2.0% in relation to 3Q05, reflecting the increase in the postpaid MOU by 3.3%. When compared to the accumulated total for 2005 in relation to 2004, the 7.0% drop is due, mainly, to the reduction in the inbound MOU, keeping in mind that the pre-paid MOU is impacted by the reduction in the inbound fixed-to-mobile traffic.

The net services revenue grew 18.0% and 12.4% in relation to 4Q04 and 3Q05, respectively, recording R$ 488.7 million. Such growth is mostly caused by the increase in the customer base and greater use of data services, although partially offset by the effects of profile adequacy procedures, such as Vivo Ideal and other customer loyalty campaigns. The growth in the accumulated 2005 was 9.9%, recording R$ 1,762.8 million.

Regarding the growth in the net services revenue it must be highlighted that “subscription and usage revenue” recorded 36.9% and 20.2% increases over 4Q04 and 3Q05, respectively, due to the increase in the total outgoing traffic, partially impacted by the transition from fixed-to-mobile traffic to mobile-to-mobile traffic (with consequent drop in interconnection revenue) and the partial Bill & Keep effect.

Data revenues, which are classified in other services, increased by 97.0%, in the year-to-year comparison, reaching 4.9% of the net service revenues in 4Q05 (2.9% in 4Q04). This increase has continued to occur due to a more widespread access and use of such services, in addition to the several services launched on the market and the increase in the customer base, notably in the expansion of the 1xRTT network in Rio de Janeiro. In 4Q05, the SMS accounted for 53.5% of data revenues. Average number of SMS messages sent per month in the year was some 19 million, exceeding by 58% the total recorded in 2004.

The reduction in personnel cost in 2005 in relation to 2004 is mainly due to adjustments in headcount, which is partially offset by salary increases caused by collective bargaining agreement. The positive variation between 4Q05 and 3Q05 is a result of the collective agreement signed in November and the reflexes in provisions and benefits.

The 18.8% reduction in the cost of services rendered in 4Q05 over 4Q04 is due to an extraordinary effect in 4Q04, which increased the comparison basis. The 2.8% increase in the cost of services rendered in the year 2005 in relation to 2004 is a result of the increase in the Fistel Fee due to increase in the customer base, in leases/insurances and condominium fees, especially property lease, and also in third-party services, especially in connection with network maintenance and electric power, partially offset by a reduction in connection (network and transmission elements) and interconnection costs.

Cost of goods sold decreased by 36.6% in relation to 4Q04 and by 9.1% when comparing 2005 with 2004, due to the decreased number of activated handsets (gross additions decreased by 27.1% in 4Q05 over 4Q04 and by 9.9% in 2005 over 2004), as a result of market conditions.

In 4Q05, selling expenses recorded a 32.5% increase over 4Q04 and 37.4% increase in the comparison between the year 2005 over 2004, caused by an increase in expenses with third-party services, especially publicity, commissions, and post-sale “client care”, related to the increase in total customer base recorded in 2005.

The Provision for Bad Debt – PBD recorded the amount of R$ 32.0 million in 4Q05 and R$ 62.5 million in the year 2005.
In addition to the effect from adjustments in the recognition of the acquisition of customers, it must be mentioned that the company provisioned revenue from receivables of calls made through the networks of other operators. Such values, according to the present regulation are obligatorily paid to the cited operators, independently of recognition of such calls from our clients. It must be said that structural measures and process actions have been adopted, including substitution of systems and certification of analog networks and TDMA of other operators to substantially reduce said expenses.
Disregarding the above mentioned effects, we estimate that the PDD would have recorded R$ 22.5 million for 4Q05 and R$ 48.4 million for year 2005, in line with the business evolution.
By the same criterion, we estimate that the EBITDA in 4Q05 would have been R$ 147.8 million with an EBITDA Margin of 25.8%. For the year 2005 the EBITDA would have been R$ 528.2 million with a 25.4% margin.

The general & administrative expenses recorded an increase of 192.5% in the 4Q05 compared to 4Q04 and it is due to an extraordinary effect in 4Q04, which increased the comparison basis. In the accumulated total for 2005 over 2004, it increased 32.7% due to the expenses with maintenance of systems and taxes.

For 2005 the EBITDA (earnings before interests, taxes, depreciation and amortization) was R$ 514.1 million, with 24.7% margin. The variation recorded in the EBITDA in the periods reviewed was caused, among other factors, by the drop in the revenue from sale of handsets, partially offset by the cost of goods sold, and also affected by the increase in the service selling costs (Third-party and PBD) and costs of services rendered (Fistel and other fees and contributions and third-party services).

In 4Q05, the EBITDA recorded R$ 138.3 million, with 24.1% margin, up 4.4 p.p. in relation to 4Q04 due, mainly, to the increase in the total net revenue and a reduction in the SAC.

In 4Q05, depreciation and amortization decreased by 3.9% over 4Q04, due to the end of the equipment depreciation period. When compared to 3Q05, the 5.3% growth is a result of the activation of assets due to the conclusion of work.

The net financial revenues in 4Q05 increased by R$ 1.0 million in comparison to 3Q05, especially due to the increase in the net cash position, which was partially offset by the reduction in the interest rate in the period (4.71% in 3Q05 and 4.31% in 4Q05), as well as to the PIS/Cofins expense (R$ 2.6 million) on the allocation of the Interest on Own Capital which was paid in December 2005.

In the comparison of the accumulated total for 2005 with the same period of 2004, the net financial revenue recorded a R$ 21.1 million increase due to an increase in the net cash position, as well as an increase in the actual interest rate in the period earned from financial investments (actual CDI of 16.17% in 2004 against 19.0% in 2005).

The company recorded a net profit of R$ 33.2 million in the 4Q05 and R$ 111.2 million in the accumulated total for 2005, 300.0% and 19.8% up in relation to 4Q04 and 2004, respectively.

On December 31, 2005, TSD had no debts related to loans and financings (R$ 15.6 million on September 30, 2005). Cash and financial investments recorded R$ 454.4 million, offset by derivative assets and liabilities for protection of non-financial exchange liabilities (R$ 3.7 million payable), resulting in a net cash position of R$ 450.7 million, a 30% increase, in comparison to September 2005.

The CDI for the period (4.31% in 4Q05) and the operating cashflow of Tele Sudeste enabled the company to settle debts that matured in the period and to increase its net cash position.

Accumulated total of capital expenditures of R$ 297.1 million in the year are basically due to the following factors: (i) information systems; (ii) maintenance of quality and expansion of the coverage in order to meet the growth of the customer base; and (iii) terminals and technology to the corporate segment.

The positive operating cashflow evidences that TSD has generated funds from its operations, that are sufficient to implement its capital expenditures program, having recorded R$ 13.1 million in the quarter and R$ 217.0 million in 2005.

Capital Market

In 4Q05, the value of TSD’s common shares (ON) and preferred shares (PN) appreciated by 51.2% and 60.0%, respectively, while the Bovespa (São Paulo Stock Exchange) index grew 5.9%. By the end of 4Q05, ON and PN shares were traded at R$ 25.70 and R$ 28.00, respectively.

The price of TSD’s level II ADRs appreciated by 57.3% in the quarter, in face of a 1.4% increse in the Dow Jones index. The closing price of TSD’s ADRs for the quarter was US$ 12.11.

The managements of Telesp Celular Participações S.A. (“TCP”) and Tele Sudeste Celular Participações S.A. (“TSD”), in the form and for the purposes of CVM Instructions no. 319/99 and 358/02, informed to the public that their respective Boards of Directors, on December 04, 2005, approved the proposal to be submitted to the shareholders of the Companies, of a corporate restructuring for merger of TSD into TCP.

The managements of TCP and TSD consider that the Corporate Restructuring, with the consequent concentration of the shareholders of both Companies and of TSD’s equity in one sole publicly-held company, with consequent extinguishment of TSD, will simplify the present organizational structure, by reducing costs and increasing the equity value for the shareholders, allow their shareholders to hold interest in a company with higher liquidity in the Brazilian and foreign stock exchanges, and make easier the unification, standardization and rationalization of the general management of TCP’s and TSD’s businesses, allowing enhanced synergies between the referred Companies, which, either directly or through the respective operators controlled by them, already use ”VIVO” brand.

In the Shareholders Meeting of TCP and TSD, held on February 22, 2006, the Corporate Restructure was duly approved and Telesp Celular Participações will be named VIVO PARTICIPAÇÕES S.A..The full contents of the above mentioned terms and conditions may be obtained from our web site: www.vivo.com.br/ir .

• At the end of 2005, the VIVO Institute had already benefited more than 500 thousand persons in its sphere of influence through concentrated actions in education and environment, by means of partnerships with big institutions both in the private and in the public domains thus consolidating its performance.
  
  
• The Programa Vivo Voluntário (Vivo Volunteer Program) that operates in projects directed to help persons with visual deficiency, in its year and a half of existence, has more than 600 collaborators.. In the last quarter 2005, inaugurated in Rio de Janeiro a tape recording studio and an audio library, two special places for the volunteers to tape read books and produce CDs that will be given to institutions that help people with visual deficiencies.
  
  
• By means of an initiative undertaken in the 2005 Christmas, the volunteers collected more than 6,000 gift packages throughout the Country. The packages contained toys and clothes for children that were distributed to kids sponsored by entities that have signed partnership agreements with the VIVO Institute.
  
  
• Vivo and Vivo Institute were awarded several prizes in the last quarter of 2005, among which the following are worthy of mention: the Environment Case Prize, to Vivo’s Waste Management project, awarded by Valor Econômico newspaper; Abrafort Prize to Vivo Volunteer Program; Darcy Ribeiro Education Prize awarded by the Brazilian House of Representatives to “Escola Solidária” project, which is supported by the Institute; APCA Prize to ESPN’s Sports Caravan television project, supported by Vivo Institute, and one of the finalists of the Esso Journalism Prize; in addition to a mention to Vivo in the 2005 Good Corporate Citizenship for the support given to education projects, such as Young Excelling, carried out in partnership with Ayrton Senna Institute.

Main Prizes, Awards and Events

• Vivo was awarded, in October, the Superbrand Awards 2005 trophy, delivered by Superbrands Brasil, an affiliate of Superbrands Global – an independent international organization engaged in worldwide brand evaluation and projection. This is the first national edition of this world project, which has been carried out for ten years in 50 countries.
  
• Vivo was further awarded, in November, with two trophies in the 2005 edition of the B2B Quality Standard prize, sponsored by Padrão Editorial. 94 companies participate in this ranking. Vivo has been also outstanding in the Info 2005 Prize, sponsored by Revista Info, of Abril publishing company. The prized case was the Vivo Localiza service. Such prizes evidence the market’s recognition of our efforts, besides attesting to the quality of Vivo’s professional staff.
  
  
• Vivo Open Air, the largest open-air cinema in the world, was awarded a prize in December by Cool Magazine, being considered the best event by Cool Magazine for the second consecutive year.
  
  
• Vivo was awarded the title of Year’s Advertiser in Caboré 2005 Prize. Vivo is the Caboré’s year advertiser, which prize is awarded by Meio & Mensagem newspaper.

Subsequent Events

Vivo has launched the digital roaming service in Minas Gerais and in 6 Northeast states. Starting in January 30, Vivo postpaid customers who buy a Motorola A840 – GLOBALMOTO handset will have available an automatic digital roaming service in all Brazilian states, in addition to the international roaming in more than 170 countries in the five continents, using the same handset and same Vivo telephone number.