Press Release 1 Q01 Tele Nordeste Celular En

www.timnordeste.com.br 1

Contacts:

Tele Nordeste Celular Participações S.A.Paulo Narcélio Simões Amaral55.81.3216.2591Fabíola [email protected] [email protected]

TELE NORDESTE CELULAR PARTICIPAÇÕES S.A.ANNOUNCES FIRST QUARTER 2001 RESULTS

Recife, Brazil (May 14, 2001) – Tele Nordeste Celular Participações S.A. (NYSE: TND,BOVESPA: TNEP3, TNEP4) (“Tele Nordeste Celular” or “the Company”), the holding companycontrolling the operating companies serving Band A cellular telecommunication clients in thestates of Piauí, Ceará, Rio Grande do Norte, Paraíba, Pernambuco and Alagoas under the TIMbrand name, announced today its results for the first quarter of 2001 in accordance withBrazilian GAAP.

• 65.5% of market share at the end of March 2001;• 39.2% of EBITDA margin in the quarter, reaching R$79.2 million;• Reduction of 47.1% at the bad debt expenses quarter over quarter.

Operational Highlights

Commercial activities during the first quarter of 2001 resulted in consolidated gross addition of134,498 clients (of which 97,004, or 72.1%, were prepaid). Accumulated net additions duringthe first quarter of 2001 totaled 45,619, all prepaid, as a result of the disconnection of 14,995clients from the post-paid system. The propose of those disconnection was to clean the clientsbase, as a way to reduce and control the bad debt. Excluding those disconnection, theconsolidated net addition for the first quarter of 2001 was 60,614.

The Company had a total of 1,556,619 clients on March 31, 2001, of which 816,603 (52.5%)were post-paid clients and 740,016 (47.5%) were prepaid clients. The market share at the endof the first quarter of 2001 was estimated at 65.5%.

The subscriber acquisition cost was R$100 in the first quarter of 2001 compared to R$80 duringthe fourth quarter of 2000 and R$169 during the first quarter of 2000.

As a result of the intensification of the collections and billing activities and the adoption ofrigorous collection procedures and polices, the bad debt levels are showing an improvement.During the first quarter of 2001 the bad debt was 4.8% of gross revenue, against 8.3% duringthe fourth quarter of 2000, and 7.2% during the first quarter of 2000.

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In February of 2001, two new services were offered by the Tele Nordeste Celular’s operatingcompanies: Intelligent Network and WAP.

Intelligent Network is a new conception in business mobile communications. It is a servicedesigned for companies, that permits the creation of groups of users, promotes theimprovement of the mobile communication and permits the control of generated and receivedcalls. All in accordance with the company definition.

Wap service is provided through TIMnet, a subsidiary company created with the objective ofdevelop internet solutions and innovative value added services. Although the technology wasavailable, this service was not offered before, because the lack of TDMA WAP handsets in thebrazilian market.

Still during the first quarter, the Tele Nordeste Celular’s operating companies introduced twonew tariff plans options for the post-paid service, with very reduced tariffs: the 60 and 90 plans.These are excellent alternatives for those who are already taking the advantages of being TIMclients and for new clients who will choose a plan that most attend their requirements.

Financial Highlights

Tele Nordeste Celular’s consolidated net income for the first quarter of 2001 was R$10.1 millionor R$0.03 per 1,000 shares, compared to consolidated net income of R$12.9 million for thefourth quarter of 2000. This compares to a consolidated net income of R$11.2 million in the firstquarter of 2000.

For the first quarter of 2001, Tele Nordeste Celular reported consolidated EBITDA and EBIT ofR$79.2 million and R$36.9 million, respectively, and an EBITDA margin of 39.2% and an EBITmargin of 18.3% over the net operating revenues, compared to EBITDA of R$81.9 million andEBIT of R$39.9 million, representing an EBITDA margin of 37.5% and an EBIT margin of 18.3%over net operating revenues reported for the fourth quarter of 2000, and EBITDA of R$73.5million and EBIT of R$47.4 million, representing an EBITDA margin of 34.3% and an EBITmargin of 22.1% over net operating revenues reported for the first quarter of 2000.

Consolidated net operating revenues in the first quarter of 2001 reached R$202.3 million,against to R$218.3 million in the fourth quarter of 2000 and R$214.5 million in the first quarter of2000.

Net consolidated revenues in first quarter of 2001, reduced 7.3% when compared to the fourthquarter of 2000. This reduction was due to the lowest income traffic volume. During the fourthquarter of 2000, besides the seasonality common in this period of the year, where the tourism

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increases a lot, there was an additional revenue of roughly R$18 million due to the incomingtraffic not declared in the previous quarters, and recognized only in the fourth quarter of 2000.Another effected was the month of February, that besides be shorter, in this year the Carnivalwas in February. So, the month of February had only 17 business days, provoking a strongimpact in the traffic volume generated during the month.

Another important factor was the reduction of 26.8% in the handsets sales, that reflected thereduction on the subsidies levels. Considering only the telecom services revenues the reductioncompared to the fourth quarter of 2000 was 6.5%.

For the first quarter of 2000, consolidated net operating revenues decreased 5.7%. Thisreduction was mainly due to the lowest volume at the handsets sales, roughly 51.6%. Excludingthe revenue from the handsets sales, the telecom services revenue decreased 2.2%. Thisdecreased was due to the clients‘ migration from post-paid service to prepaid service, thatgenerated a decrease in the monthly subscription payments of 18.1%.

Selected Consolidated Financial Data (in thousands of Reais)

2001 20001Q 4Q 1Q

Gross Revenues - Usage charges 113,530 115,971 131,388 - Monthly subscription payments 42,733 39,942 52,194 - Interconnection 84,993 102,977 61,511 - Sale of handsets and accessories 15,191 20,741 31,375 - Other 1,113 362 2,748Subtotal 257,560 279,993 279,216 - Taxes (55,300) (61,713) (64,738)Net Operating Revenue 202,260 218,280 214,478Cost of services and of goods sold - Depreciation and amortization (29,973) (29,373) (24,357) - Personnel (2,481) (1,535) (2,743) - Materials (137) (122) (125) - Circuit leasing (8,849) (9,508) (7,989) - Leases and insurance (2,938) (2,445) (2,222) - Handsets and accessories (12,545) (15,307) (31,721) - Fistel (182) (345) (107) - Plant Support and maintenance (1,761 (5,134) (540) - Interconnection (27,559) (22,445) (26,130) - Other (2,114) (1,433) (1,059)Subtotal (88,539) (87,647) (96,993)Gross profit 113,721 130,633 117,483

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Consolidated gross profit for the first quarter of 2001 decreased 12.9% compared to the fourthquarter of 2000. This decrease was due to the effect provoked by the additional revenue fromthe incoming traffic accounted in the fourth quarter of 2000. Compared to the first quarter of2000, the reduction was 3.2%. This reduction was mainly due to the clients’ migration from thepost-paid service to prepaid service, above mentioned.

Selected Financial Data (in thousands of Reais)

2001 2000

1Q 4Q 1Q

Operating Expenses

- Selling 48,110 63,702 52,467 - General and administrative 24,774 24,876 18,247 - Other operating expenses, net 3,897 2,173 (366)Subtotal 76,781 90,751 70,348- Net financial expenses (excluding

interest on own capital) 17,114 21,205 20,973Total, net of interest on own capital 93,895 111,956 91,321

Consolidated net operating expenses decreased 16.1% compared to the fourth quarter of 2000and increased 2.8% compared to the first quarter of 2000. The reduction compared to the fourthquarter of 2000 was a result of lower commercial expenses, mainly bad debt expenses, and dueto lower financial expenses. The increase compared to the first quarter of 2000, was a result ofbigger general and administrative expenses and the effect of the amortization of the goodwill,that came from the privatization.

Consolidated bad debt expenses during the first quarter of 2001 reached R$12.3 million,representing 4.8% of gross revenues and showing a reduction of 47.1% (from R$23.3 million toR$12.3 million) when compared to the fourth quarter of 2000 and a reduction of 38.8%% whencompared to the first quarter of 2000.

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Gross Profit (in R$000)


Amortization of Goodwill

On June 30, 2000 Tele Nordeste Celular and its operating companies completed a restructuringthat resulted in the transfer of the premium paid during the privatization process from BitelParticipações S.A., the parent company of Tele Nordeste Celular, to each one of the operatingcompanies. This restructuring is aimed at taking advantage of a fiscal benefit estimated atR$200 million over 8 years, through to 2008, which will be incorporated into their share capitalby the operating companies, with significant financial benefits for them. A proposal for themerger of the operating companies is awaiting Anatel approval.

During the year 2000, the consolidated amortization of the premium, net of reversal of theprovision for the integrity of shareholder's equity, was R$13.1 million, generating a fiscal benefiton the order of R$11.0 million.

On March 31, the consolidated amortization of the premium, net of reversal of the provision forthe integrity of shareholder’s equity, was R$6.3 million, generating a fiscal benefit on the orderof R$6.3 million.

Capitalization of the Fiscal Benefit

The Extraordinary General Shareholders Meeting of April 30, 2001 approved the proposal of theBoard of Directors to increase the Tele Nordeste Celular capital in the amount of the fiscalbenefit generated during the year 2000.

The notice to the shareholders about the capital increased was released on May 3, 2001. Thefull document is attached.

Capitalization of Retained Profits

The Extraordinary General Shareholders Meeting of April 30, 2001 approved the proposal of theBoard of Directors to increase the Company’s social capital in the amount of R$66.2 million,which is a part of the retained profits total amount, to attempt the Brazilian laws, about the limitof the profits reserves in relation of the capital .

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Net Operating Expenses (in R$000)


Dividends and Interest on Shareholdes’ Equity

The Ordinary General Shareholders’ Meeting of April 30, 2001 approved the proposal of theBoard of Directors to payment of interest on shareholders’ equity and complementary dividends.

The proposal approved by the Ordinary Shareholders’ Meeting distributed annual dividendsequivalent to 25% of the adjusted net income, after deducting 5% (R$1.4 million) for the legalreserve and adding R$9.9 million from the realizable profit reserve. This represented totaldividends of R$9.2 million, or R$0,03 per 1,000 shares, net of income tax, which will be paidpart as interest on shareholders’ equity as per Brazilian legislation and part as complementarydividends.

The initial payment date of the above mentioned dividend payment will be June 30. 2001

ARPU

The blended average revenue per user (ARPU), net of taxes, for the first quarter of 2001 wasR$41.83 per month, compared to R$47.07 per month in the fourth quarter of 2000, and R$51.05per month for the first quarter of 2001. The reduction when compared to the fourth quarter of2000, was due to the following events occurred on that quarter: disconnection of roughly 58,000clients and the increase in the incoming traffic. The reduction when compared to the first quarterof 2000, was due to the increase in the pre-paid clients base. The post-paid ARPU in 2000 wasnegatively affected by the blocked lines for credit reasons procedure, which was adopted at theend of the second quarter of 2000.

In 2001 blocking is carried out on a partial basis, too, and as a result, only incoming trafficrevenues are generated by these clients. In March, the clients base was 47.5% prepaid and52.5% postpaid.

Competition

The Company estimates that its market share at the end of the first quarter of 2001 wasapproximately 65.5% in terms of number of accesses. The penetration rate in the region at theend of March 2001 was estimated at 9.0%.

Debt Profile

Consolidated debt at March 31, 2001, was R$394.3 million, with R$58.1 million maturing in theshort-term. The debt in foreign currency in the amount of R$148.5 million was totally convertedto Reais and with pre-fixed costs, in line with the Company’s policy of minimizing exposure toforeign currency risks and interest rate fluctuations.


Capital Expenditures

During the first quarter of 2001, the company invested R$15.3 million. The investments weredirected to expansion, digitalization and optimization of the network.

On March 31 the Company had 812 radio base stations (RBEs), of which 16 were mobile andprovided service in 307 municipalities that corresponded to coverage of 75% of the population.Network digitalization was of the order of 74%; that is, 74% of voice channels were digital, with90% of its clients using digital handsets.

Annexes:- Announces to the shareholders- Selected historical statistics- EBITDA calculus- Financial statements as of March 31, 2000 and 1999

This press release contains forward-looking statements. Statements that are not statements of historical fact only reflect the beliefs andexpectations of the Company’s management. The words “anticipates,” “believes,” “estimates,” “expects,” forecasts,” predicts,” “plans, ”“projects,” and similar words are intended to identify these statements, which necessarily involve known and unknown risks and uncertainties,forecast or not by the Company. Accordingly, the actual results of operations of the Company may be different from the Company’s currentexpectations, and the reader should not place undue reliance on these forward-looking statements. Forward-looking statements speak only as ofthe date they are made, and the Company does not undertake any obligation to update them in light of new information or future developments.


NOTICE TO SHAREHOLDERSCAPITAL INCREASE

We inform the Shareholders and the general market that the Extraordinary GeneralShareholders Meeting of Tele Nordeste Celular Participações S.A. (“Tele Nordeste Celular” orthe “Company”), on April 30, 2001, approved the increase in the Company’s Capital Stock byR$10,984,922.49 (ten million, nine-hundred eighty four thousand, nine-hundred twenty-twoReais and forty-nine cents) to R$ 119,673,193.23 (one-hundred nineteen million, six-hundredseventy three thousand, one-hundred ninety-three Reais and twenty-three cents), by means ofthe capitalization of the tax benefit resulting from amortization of the premium incorporated as aresult of the partial split of Tele Nordeste Celular Participações S.A. (“TNC”), as authorized byarticle 7, paragraph 1 of CVM Instructions no. 319/99 and 320/00 and in accordance with clause8 of the Protocol of Partial Split of TNC.

As provided in the CVM Instructions referred to above and in article 171 of Law 6.404, datedDecember 15, 1976, the shares issued in connection with the capitalization are to be deliveredto the controlling shareholder, Bitel Participações S.A., and the remaining shareholders have apreemptive right to subscribe for such shares. Shareholders who exercise their preemptive rightshall pay directly to Bitel Participações S.A. the corresponding amounts for the exercise of suchpreemptive right.

The Shareholders may exercise the preemptive right within 30 (thirty) days beginning on thedate of the publication of this Notice, and the following conditions shall be observed:

1. VALUE OF CAPITAL INCREASE:R$10,984,922.49 (ten million, nine-hundred eighty four thousand, nine-hundred twenty-twoReais and forty-nine cents).

2. NUMBER OF SHARES AND TYPE OF SHARES TO BE ISSUED:3,369,608,000 (three billion, three-hundred sixty-nine million, six-hundred eight thousand)common shares with no par value, in book-entry form.

3. PRICE OF ISSUANCE AND SUBSCRIPTION:R$3.26 per 1,000 shares.

4. JUSTIFICATION OF THE ISSUANCE PRICE:The appraisal of the issuance price for the shares was made based on the average marketvalue of the shares, in accordance with the quotes of the 10 trading days in the São Paulo StockExchange - BOVESPA counted retroactively as of and including 4/27/2001.

The issuance price will remain fixed during the period of exercise of the preemptive rights.

5. PERIOD FOR EXERCISING THE RIGHT OF PREFERENCE:

Start date: 3/5/2001 End date: 1/6/2001

6. PROPORTION OF RIGHT:To determine the amount of shares to subscribe, the shareholder shall multiply the number ofshares owned on 4/30/2001 by the following factors:

TYPE OF SHARE OWNED FACTOR PER SHARE TYPE TO BE SUBSCRIBEDCommon 0.010076608249 CommonPreferred 0.010076608249 Common


7. METHOD OF PAYMENT:On demand, at the moment of subscription.

8. QUALIFICATIONS FOR SUBSCRIPTION:

8.1- Shareholders who acquired shares before 4/30/2001 will have the right to subscribe.Shares acquired as of 5/1/2001 will be ex-right of subscription to the acquirer.

8.2- The shareholders who wish to negotiate their subscription rights during the period toexercise the preemption right shall request the document of assignment of rights, which will beissued by the Depositary of the book entry shares, Banco Real, or by the Custodian.

8.3- The Custodians may issue only one assignment of nominative right for each subscriber.

8.4- The Custodians may subscribe in their names, as fiduciary owners, up to the amountcorresponding to the shares under custody.

8.5- After the assignment of rights is issued and in the event of a new transfer, a statement onthe back of the assignment document will be required, with a notarized signature.

8.6- Under no circumstances will a copy of the assignment document be accepted.

9. DIVIDENDS:When the dividends relative to the year of 2001 are paid, the shares resulting from thissubscription will have full right to the dividends.

10. LEFTOVERS:There will be no leftovers of right of subscription.

11. GENERAL INSTRUCTIONS:Within the period for exercising the preemptive right, the shareholders may go to one of thebranches listed below to request the Share Subscription Bulletin, specifying the number ofshares to be acquired.

12. DOCUMENTATION FOR SUBSCRIPTION AND ASSIGNMENT OF RIGHTS:

12.1- Individuals: Identification card, taxpayer’s registration (CPF) issued by the Ministry ofFinance and proof of address.

12.2- Legal Entities: Articles of Incorporation or By-laws, as well as minutes evidencing theelection of the company’s representatives, and proof of address.

12.3- In the event of representation by proxy, it will be necessary to present the proxy, inaddition to the documents referred to in the items above concerning the grantor.

13- PLACES OF ATTENDANCE:Branches of the Bank.

Recife, April 30, 2001.Paulo Narcélio Simões Amaral

Chief of Financial andInvestor Relations Officer


Consolidated Statistics

1Q01 4Q00 1Q00

Clients 1,556,619 1,511,000 1,313,252Net additions 45,619 28,327 125,340Market share (%) 66 65 69Market share marginal (%) 77.1 100 40Growth over same period of the previous year (%) 18.5 27.0 90.4Estimated population of region (in millions) 26.3 26.3 26.1Penetration rate (%) - Tele Nordeste 5.9 5.7 5.0 - Total 9.0 8.7 7.3Municipalities covered 307 307 289MOU total 136 166 176Churn total (%) 5.8 8.2 4.7Blended ARPU (R$) 41.83 47.07 51.05SAC - Subscriber acquisition cost (R$) 100.38 79.94 168.63Digitalization rate (%) - Network 74 74 56 - Clients 90 87 79Coverage - Population 75 75 74 - Geographical area 29 29 28Workforce 1,648 1,628 1,277

EBITDA (in thousands of Reais)

1Q01 4Q00 1Q00

Net operational revenue 202,260 218,280 214,478Operational income 19,826 9,269 26,405Depreciation 35,993 35,597 26,080Amortization of the goodwill 6,297 6,295 -Financial income (4,501) (7,099) (4,032)Financial expenses 21,615 37,712 25,005

EBITDA 79,230 81,774 73,458% EBITDA 39.17 37.5 34.3


Balance Sheet

March 31, 2001 and 2000(in thousands of Reais)

Parent Company Consolidated03.31.2001 03.31.2000 (*) 03.31.2001 03.31.2000 (*)

Assets

Curent assetsCash equivalents 178 1,424 69,940 7,624Trade accounts receivable - - 122,550 169,630Inventory 28 15 12,636 44,579Telecommunications companies - - 50,524 36,462Taxes and contributions receivable 2,171 1,937 37,935 14,759Deferred income and social contribution taxes 1,080 1,082 43,536 21,677Dividends and interest on shareholders’ equity 8,662 9,632 - -Prepaid expenses 66 17 16,265 14,617Other rights 1,076 1,597 13,813 52,886

13,261 15,704 367,199 362,234

Noncurrent assetsLoan to subsidiaries 15,670 27,232 - -Tax incentives - - 2,077 1,912Deferred income and social contribution taxes - - 160,361 -Amounts in litigation - - 1,083 834

15,670 27,232 163,521 2,746

Permanent assetsInvestments 578,622 341,110 - 1Property, plant and equipment 4,877 4,901 697,250 654,269Deferred asset - - 3,967 -

583,499 346,011 701,217 654,270

612,430 388,947 1,231,937 1,019,250

(*) Reclassified


Balance Sheet

March 31, 2001 and 2000(in thousands of Reais)

Parent Company Consolidated03.31.2001 03.31.2000 (*) 03.31.2001 03.31.2000 (*)

Liabilities

Current liabilitiesSuppliers 862 504 33,032 76,898Financing and loans - - 58,113 332,370Debentures 802 594 34,498 45,796Taxes payable 1,843 1,205 4,893 5,885Salaries and vacation pay 4,013 10,641 - -Subsidiaries - - 30,949 9,843Telecommunications companies 11,594 10,373 18,963 16,625Dividends and interest on shareholders’ equity 7,371 379 19,827 19,937Other liabilities

26,485 23,696 200,275 507,354

Noncurrent liabilitiesFinancing and loans - - 136,147 45,376Debentures - - 200,000 -Other liabilities - - 903 93

- - 337,050 45,469

Minority interest - - 108,667 101,176

Shareholders’ equityCapital stock 108,843 108,943 108,843 108,943Capital reserves 204,068 - 204,068 -Profit reserves 170,405 178,922 170,405 178,922Retained profits 102,629 77,386 102,629 77,386

585,945 365,251 585,945 365,251

612,430 388,947 1,231,937 1,019,250

(*) Reclassified


Statement of Income

For the quarter end on March 31, 2001 and 2000(in thousands of Reais)

Parent Company Consolidated2001 2000 (*) 2001 2000 (*)

RevenuesTelecommunications services and sale of goods - - 257,560 279,216

DeductionsICMS (tax on distribution of goods and services) - - (42,322) (54,147)PIS (profit participation program tax) and COFINS (socialsecurity financing contribution) - - (9,156) (10,399)FUST/FUNTELL (tax on telecommunication services) - - (1,158) -Discounts - - (2,441) (193)Returns of goods - - (223) -

Net revenues - - 202,260 214,477

Cost of goods sold and services rendered - - (88,539) (96,993)

Gross profit - - 113,721 117,484

Operating revenues (expenses)Selling expenses - - (48,110) (52,467)Administrative and general expenses (4,338) (1,807) (24,774) (18,247)Financial expenses (89) (57) (21,615) (25,005)Financial income 84 734 4,501 4,032Equity in income of subsidiaries 15,389 11,908 - -Other operating income - - 5,362 818Other operating expenses (795) (74) (9,259) (210)

Operating income (loss) 10,251 10,704 19,826 26,405

Nonoperating income - 17 157 305Nonoperating expenses (1) - (141) (198)

Income before reversal of interest on shareholders’ equityand income and social contribution taxes 10,250 10,721 19,842 26,512

Income and social contribution taxes (189) 439 (4,879) (11,590)Employee profit sharing - - (487) (241)Reversal of interest on shareholders’ equity - - - -

Net income (loss) before minority interest 10,061 11,160 14,476 14,681

Minority interest - - (4,415) (3,521)

Net income (loss) 10,061 11,160 10,061 11,160

Net income (loss) per lot of a thousand shares 0.03 0.03

Number of shares at year end (thousands) 334,399,028 334,399,028

(*) Reclassified

Press Release 1 Q01 Tele Nordeste Celular En

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