Edgar Filing: BRASIL TELECOM SA

Provided by MZ Data Products

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K

REPORT OF FOREIGN ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 OF THE

SECURITIES EXCHANGE ACT OF 1934

THROUGH MAY 9, 2006

(Commission File No. 1-15256)

BRASIL TELECOM S.A.

(Exact name of Registrant as specified in its Charter)

BRAZIL TELECOM COMPANY

(Translation of Registrant's name into English)

SIA Sul, Área de Serviços Públicos, Lote D, Bloco B
Brasília, D.F., 71.215-000
Federative Republic of Brazil

(Address of Regristrant's principal executive offices)

Indicate by check mark whether the registrant files or will file
annual reports under cover Form 20-F or Form 40-F.

Form 20-F ___X___ Form 40-F ______

Indicate by check mark if the registrant is submitting the Form 6-K
in paper as permitted by Regulation S-T Rule 101(b)(1)__.

Indicate by check mark if the registrant is submitting the Form 6-K
in paper as permitted by Regulation S-T Rule 101(b)(7)__.

Indicate by check mark whether the registrant by furnishing the
information contained in this Form is also thereby furnishing the
information to the Commission pursuant to Rule 12g3-2(b) under
the Securities Exchange Act of 1934.

Yes ______ No ___X___

If "Yes" is marked, indicated below the file number assigned to the
registrant in connection with Rule 12g3-2(b):

BRASIL TELECOM REACHES 33.5% EBITDA MARGIN IN 1Q06

Brasília, May 08, 2006 - Brasil Telecom S.A. (BOVESPA: BRTO3/BRTO4; NYSE: BTM) announces its consolidated results for the first quarter of 2006 (1Q06). The Company’s unaudited financial statements are presented in million of Reais, except when stated otherwise, and are in conformity with generally accepted accounting principles in Brazil.

HIGHLIGHTS

2,460.0 thousand mobile accesses in 1Q06, 11.2% and 145.1% higher than 4Q05 and 1Q05, respectively.
The mix for post-paid mobile accesses reached 33.3%, compared to 31.3% in 4Q05.
1,084.1 thousand broadband accesses in service in 1Q06, 6.9% and 73.4% superior than 4Q05 and 1Q05, respectively.
Data communications and other services revenue totaled R$538.4 million in 1Q06, 28.0% higher than 1Q05.
Brasil Telecom’s CAPEX in 1Q06 reached R$214.6 million, against R$782.8 million and R$282.2 million in 4Q05 and 1Q05, respectively.
Gross revenue amounted to R$3,654.9 million in 1Q06, a 5.4% growth when compared to the same period in the previous year.
Operating costs and expenses in 1Q06 totaled R$2,316.3 million, a 3.1% reduction in comparison to 4Q05 (not considering extraordinary adjustments of the respective quarter).
Total debt in 1Q06 amounted to R$4,649.5 million, 5.3% inferior than in 4Q05.



IR CONTACTS
Ricardo Florence (Head of IR)	Phone: (55 61)3415-1140	rflorence@brasiltelecom.com.br
Renata Fontes (IR Manager)	Phone:(55 61)3415-1256	renatafontes@brasiltelecom.com.br
Ruy Nagano	Phone:(55 61)3415-1291	ruy.nagano@brasiltelecom.com.br
Carla Bernardes	Phone: (55 61)3415-1123	carla.bernardes@brasiltelecom.com.br
Remi Kaiber Junior	Phone: (55 61)3415-1411	remi@brasiltelecom.com.br

MEDIA CONTACTS
Cesar Borges	Phone: (55 61)3415-1378	cesarb@brasiltelecom.com.br

Brasil Telecom S.A. is a telecommunications company which provides fixed line telephony services in local, domestic long distance, international long distance, mobile telephony, public telephony, data communication, network and value added services in the states of Rondônia, Acre, Mato Grosso, Mato Grosso do Sul, Tocantins, Goiás, Santa Catarina, Paraná and Rio Grande do Sul, as well as in the Federal District. Its coverage area corresponds to 24% of the population (approximately 44 million inhabitants), 27% of the GDP (approximately R$420 billion in 2003) and 33% of the Brazilian territory (about 2.8 million km²).

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OPERATING PERFORMANCE

WIRELINE TELEPHONY

NETWORK

The utilization rate was stable throughout 1Q06, reaching 88.2% . Brasil Telecom has a technical reserve of approximately 1.3 million lines installed to serve immediately an increase in demand with no additional investments needed. By the end of 1Q06, Brasil Telecom’s plant had 10.8 million lines installed and 9.5 million lines in service (Annex XV).

The hybrid terminal – LigMix - reached an 8.7% stake regarding lines in service by the end of March, against 8.2% in December. The hybrid terminal is only offered in switching stations where there is idle capacity when the client’s bad debt is confirmed, or through marketing campaigns directed to low income households.

TRAFFIC

In 1Q06, Brasil Telecom reached 2.3 billion billed pulses, a 4.2% reduction in comparison to 4Q05 (Annex XIV). Such reduction can be explained by seasonal effects once vacation and several holidays happen during first quarter and the weighted average of business days is inferior to the other quarters of the year. The growth of broadband accesses sold in the period and the migration from wireline traffic to mobile also contributed for such performance.

Brasil Telecom made in 1Q06 adjustments in exceeding pulses, which reflected in the booking of hired pulses from the plan “Franquia Adicional”, causing an increase in traffic since 1Q05. Such adjustment included the reclassification of the revenue incurring from the commercialization of the plan “Franquia Adicional” from subscription line to measured service.

Long distance traffic decreased 0.8% in comparison to 4Q05, thus Brasil Telecom registered 1.4 billion minutes in 1Q06 (Annex XIV). Among the factors that explain such reduction are seasonal effects and greater competition.

At the end of March, Brasil Telecom reached a 61.3% market share in the interregional segment and a 34.9% market share in the international segment (quarterly average).

By the end of 1Q06, Brasil Telecom’s quarterly average long distance market share reached 84.9% in the intra-regional segment, 2.0 p.p. superior than the 82.9% market share registered in 1Q05. In the interregional and international segments, Brasil Telecom achieved market share of 10.3 p.p. and 5.8 p.p., respectively, in 12 months.

PS: The market shares hereby presented refer to Brasil Telecom’s concession area (Region II of the PGO – General Concession Plan), except when mentioned otherwise.

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TARIFFS

On March 28, 2006, Anatel validated the maximum tariffs for the Basic Plans of the Public Switched Telephony Network (PSTN), Domestic Long Distance mode for the concessionaires of the PSTN for calls towards users of the Personal Mobile Service (SMP). The tariff readjustment of 7.99% for VC-2 and VC-3 calls became effective as of March 29, 2006.

MOBILE TELEPHONY

BrT Mobile reached 2,460 thousand mobile accesses in service (Annex XVIII), a net addition of 247.2 thousand accesses in the quarter. This figure represents 31.4% of the company’s goal for December 2006. At the end of 1Q06, BrT Mobile’s subscriber base was 11.2% higher than 4Q05 and in comparison with 1Q05, there was a 145.1% increase. BrT Mobile sold 1.9 million accesses in the last 12 months.

BrT Mobile net additions represented 40.1% of the total net additions in Region II during 1Q06, mainly due to the launch of the “Novo Pula-Pula Controle”, in which the client pays R$34.90/month and can receive up to the same amount in bonus minutes according to the minutes incurring from incoming calls and the remodeling of the “Pula-Pula Conta”, in which the client pays a certain amount for a package of minutes (franquia) every other month, with the bonus minutes incurring from incoming calls being limited to the amount of minutes of the chosen package (franquia).

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At the end of March, our mobile operations had 820.2 thousand post-paid subscribers (representing 33.3% of our mobile customer base), which represented the best post-paid mix among the mobile operators present in Brazil, which discloses information.

During the 1Q06, BrT Mobile reached 3,333 sale spots and maintained its coverage to 782 localities. Currently, its coverage reaches 86% of the Region’s population.

At the end of 1Q06, BrT Mobile achieved a 9.4% market share in its area of operations, compared to 4.8% in 1Q05. In the Mid-western and Northern regions, BrT Mobile reached 11.9% market share, surpassing the company which entered third in the market.

DATA

During 1Q06, Brasil Telecom added 70.2 thousand accesses to its plant, amounting to 1,084.1 thousand broadband accesses in service by the end of March, an increase of 6.9% and 73.4% in comparison to 4Q05 and 1Q05, respectively (Annex XV).

The residential market represented 93.7% of the total broadband accesses by the end of 1Q06, while the corporate market represented 6.3% .

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By the end of March 2006, Brasil Telecom registered growth in the following data transmission services for the corporate market: (i) Dedicated IP, which is an internet access service with speeds up to 155 Mbps, (ii) Serviço Plus, which is a data transport service and (iii) IP Turbo, a symmetric access to the internet at 512 Kbps, without the need for an internet service provider.

INTERNET SERVICE PROVIDERS

Brasil Telecom is the leader in the Brazilian dial-up internet market, having generated nine billion minutes in 1Q06. Approximately 1 million subscribers pay for services, including broadband accesses and value added services.

iBest consolidated its position as the largest dial up ISP in Region II with a market share of approximately 52% by the end of 1Q06. iBest is present in more than 1,800 cities, has a subscriber base of approximately 11 million registered users and 1.5 million active users.

iG generated 4.6 billion minutes in 1Q06, which places it as leading traffic generator in Regions I and III. iG is present in more than 1,200 cities and has a subscriber base of 16.2 million registered users and 2.0 million active users. iG's broadband subscriber base increased 16% in comparison to December 2005, reaching 209 thousand active clients by the end of 1Q06.

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BrTurbo reached 580 thousand clients on Region II by the end of 1Q06, 6% greater in comparison to 4Q05. Approximately 57% of Brasil Telecom’s broadband accesses were BrTurbo subscribers.

At the end of March, Brasil Telecom had 793 thousand broadband customers in Brazil.

FINANCIAL PERFORMANCE

REVENUE

Gross revenue from local service reached R$1,769.1 million in 1Q06, 2.8% lower than 4Q05’s. The subscription and measured service revenues accounted for 70.6% and VC-1 calls accounted for 28.5% of the total revenue from local service (Annex IV). In 1Q06, Brasil Telecom included revenues from VC-1 calls as local service revenues, reclassifying this account for the fiscal year of 2005.

In the first quarter, gross revenue from subscription fees totaled R$893.3 million, a 0.9% reduction in comparison to the R$901.2 million achieved in 4Q05 due to the reduction of 17 thousand lines to the plant in service, as well as the increase of 42.6 thousand hybrid lines, which has a monthly subscription of R$28.00, 27.4% lower than the basic subscription fee, in the Federal District). It is important to mention the reclassification made by Brasil Telecom in 1Q06, in which it transfers subscription revenues incurring from the plan “Franquia Adicional” to measured service.

Gross revenue from measured service totaled R$355.6 million in the 1Q06, 5.9% inferior to the previous quarter, reflecting the seasonal effects of the period and the commercialization of ADSL accesses, which caused a 4.2% reduction in the exceeding pulses volume and a lower average tariff than the Basic Local plan practiced in the “Franquia Adicional” plan. In comparison to 1Q05, gross revenues from measured service increased 4.5% , due mainly to the 7.27% tariff readjustment in effect as of July 3, 2005.

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Brasil Telecom made a reclassification on 1Q06 which transferred subscription revenues incurring from the plan “Franquia Adicional” to measured service. Therefore, Brasil Telecom reclassified revenues from the fiscal year 2005 in order to keep such revenues comparable. Local pulses were adjusted according to the same criteria.

Gross revenues with VC-1 calls reached R$503.5 million in 1Q06, 3.2% inferior than 4Q05, reflecting a reduction in VC-1 traffic. Regarding VC-1 traffic, as of the second semester of 2005, we have been observing a trend for reduction, which reflects the aggressive promotional campaigns focused on mobile-mobile traffic. In comparison to 1Q05, gross revenues with VC-1 calls were 2.4% inferior, despite the 7.99% readjustment in effect as of July 12, 2005.

Gross revenue with public telephony reached R$127.9 million in 1Q06, a 12.2% reduction in comparison with the revenue obtained in 4Q05 and 47.1% superior than the revenue in 1Q05. The variation in comparison to 4Q05 is mainly explained by an 8.4% reduction in sale of credit. The increase in comparison to 1Q05 was influenced by the 7.37% credit card tariff readjustment and also by the launch of Brasil Virtual Cel, which transferred R$42.6 million from the public telephony revenue to BrT Mobile in 1Q05. Brasil Virtual Cel was suspended in April, 2005.

Gross revenue from LD calls reached R$703.9 million in 1Q06, representing a reduction of 0.3% in comparison to 4Q05. This performance was influenced by a 0.8% reduction in LD traffic. In comparison to 1Q05, LD revenue was 6.8% inferior due to a 11.7% traffic reduction, compensated by a 2.94% tariff readjustment in effect as of July 3, 2005.

Interconnection revenue in 1Q06 amounted to R$108.5 million, a 26.9% and 34.1% drop in comparison to 4Q05 and 1Q05, due to the reduction of Local Network Usage Rate (TU-RL). As of January 1, 2006, this tariff corresponds to 50% of the value of the local minute from the Basic Plan. TU-RL is now R$0.03679, against R$0.04548 in 4Q05.

In 1Q06, gross revenue from data communications and other services reached R$538.4 million, a 2.6% reduction as compared to the previous quarter and a 28.0% increase in comparison to 1Q05. In comparison to the 4Q05, this performance reflects a R$23.9 million reduction regarding revenue incurring from BrT internet service providers’ (iG and iBest) traffic encouragement, which had its contracts with other telecom operators renegotiated by the end of 2005. With the decrease in TU-RL, risk incurring from the interconnection regime was reduced, generating pressure on prices. On the other hand, the growth in network formation services (DialNet, Serviço Plus, Dedicated IP) and a 6.9% expansion in ADSL accesses in service are worth being noted.

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In 1Q06, consolidated gross revenue from mobile telephony totaled R$227.6 million, of which R$173 million were related to services and R$54.6 million to the sale of handsets and accessories. This performance represents a 9.8% reduction in comparison to 4Q05 and a 54.8% increase in comparison to 1Q05.

In comparison to 4Q05 and 1Q05, respectively, gross revenues from services with mobile telephony in 1Q06 exceeded in 26.6% and 73.7%, respectively, due to the increase in the subscriber base. Gross revenues from the sale of handsets and accessories decreased 52.8% in comparison to 4Q05 once the sales channels still register a surplus in inventories due to purchases made at the end of 2005.

The blended mobile ARPU in the 1Q06 was of R$26.6 (Annex XVII). The post-paid ARPU was of R$40.0 and the pre-paid ARPU was of R$20.1. In comparison to 4Q05, the post-paid ARPU decreased 7.5% due to a greater participation of the “Plano Controle” in the post-paid mobile accesses.

Brasil Telecom’s net revenue reached R$2,476.9 million in 1Q06, 4.4% lower than the revenue registered in 4Q05 and 1.2% higher to the revenue registered in 1Q05 (Annex IV).

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COSTS AND EXPENSES

In 1Q06, operating costs and expenses amounted to R$2,316.3 million, compared to R$2,948.7 million in 4Q05. The main items that determined such performance were: provisions and losses (-61.8%), materials (-49.2%), marketing and advertising (-68.1%), and personnel (+17.1%) . (Annex V).

At the end of 1Q06, 5,420 employees worked in Brasil Telecom’s wireline segment, against 5,803 employees in the previous quarter. BrT Mobile ended 1Q06 with 735 employees, against 1,069 in the 4Q05. By the end of March, Brasil Telecom had 6,155 employees, a 10.4% reduction in comparison with December.

Total personnel costs and expenses reached R$189.2 million, a 17.1% increase as compared to the previous quarter explained by the severance expenses due to the reduction in the work force which amounted to R$44.1 million. Furthermore, the costs and expenses with personnel were influenced by the Collective Labor Agreement in effect as of January 2006, which implicated an average salary readjustment of 6.0% .

Costs and expenses with subcontracted services, excluding interconnection costs and marketing and advertising expenses, totaled R$540.9 million in the 1Q06, 10.8% inferior to the costs and expenses reported in the previous quarter. The variation of costs and expenses in the 1Q06 in comparison to the 4Q05 is explained by the following items:

R$28.3 million reduction with BrT Mobile’s handsets sales commissions expenses, due to a 39.7% reduction in the volume of handsets commercialized in 1Q06, which generated smaller expenses with sales commissions than those registered in 4Q05;
R$4.3 million reduction with consulting expenses; and
R$5.0 million reduction in call center services expenses.

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In 1Q06, interconnection costs amounted to R$498.5 million, a 3.1% and 13.5% reduction in comparison to 4Q05 and 1Q05, respectively. Such performance reflects BrT Mobile’s gain in scale, a 19.1% reduction in TU-RL and a change in the traffic profile, where VC-1 calls, which are large VU-M generators, are decreasing its participation to the total VC calls.

Advertising and marketing expenses amounted to R$20.4 million in 1Q06, a 68.1% reduction in comparison to 4Q05, explained by seasonal effects in December, 2005, due to Christmas’ campaigns.

Losses from Accounts Receivable as a percentage of gross revenue in the 1Q06 were of 3.1%, against 4.1% in the 4Q05. Losses from accounts receivable totaled R$112.8 million in the 1Q06, a 28.4% reduction in comparison to the previous quarter. In December, Brasil Telecom made additional provisions corresponding to R$74 million, regarding Losses from Accounts Receivable subject to co-billing. If the extraordinary effect is disregarded, Losses from Accounts Receivable in 1Q06 would have surpassed in R$29.4 million 4Q05’s Losses from Accounts Receivable.

In the 1Q06, provisions for contingencies totaled R$75.1 million, a reduction of R$259.7 million as compared to the 4Q05, when extraordinary adjustments corresponding to R$275 million were booked: (i) R$198 million refer to probable risks of social security and labor legal proceedings, as well as administrative proceedings and (ii) R$77 million refer to write-off of tax credits, in particular of the ICMS (Value Added) tax levied on supplies used in the maintenance of BrT’s fixed telephone network and on electric energy consumption. If the extraordinary adjustments are disregarded, the provisions for contingencies in 1Q06 would surpass by R$15.3 million the previous quarter, reflecting corrections to legal proceedings in progress.

Costs and expenses with materials totaled R$83.9 million in 1Q06, a 49.2% reduction in comparison to 4Q05, explained mainly by a 39.7% reduction in the amount of mobile handsets sold in the quarter. BrT Mobile’s costs and expenses with materials amounted to R$60.8 million, representing 72.6% of the total costs and expenses with materials registered by the Group.

Other operating costs and expenses totaled R$126.0 million in the 1Q06, a 53.8% reduction in comparison to 4Q05. In 4Q05, additional provisions were booked in the amount of R$210 million, of which, R$171 million refer to adjustments in the actuarial calculation of retirement plan obligations of Fundação BrT Prev (“Fundação BrT”), by virtue of the adjustment of its mortality table and R$39.4 million were booked due to the decision rendered by Anatel, which alters the calculation basis of FUST (Fund for the Universalization of Telecommunications Services). If the extraordinary effect is disregarded, other operating costs and expenses in 1Q06 would surpass in R$63.5 million the previous quarter. Such difference is a result of agreements made in 4Q05 with telecom operators, as well as bonuses received from suppliers due to the accomplishment of sales of mobile handsets goals in the same period. In 1Q06, R$17 million incurring from charges incurring from the extension of the concession contracts, equivalent to 2% of the PSTN (Public Switched Telephone Network) revenue, every other year, free of taxes.

EBITDA

Brasil Telecom’s consolidated EBITDA was of R$830.3 million in the 1Q06 (Annex VII). Consolidated EBITDA margin reached 33.5% in 1Q06. In 4Q05, the adjusted EBITDA reached R$874.9 million, representing an adjusted EBITDA margin of 33.8% (Annex VII).

BrT Mobile’s EBITDA in 1Q06 reached negative R$40.3 million, which represents a negative EBITDA margin of 18.1% . Although Brt Mobile’s operation is still not mature, its performance in 1Q06 was well above the one registered in the previous quarter, due to the increase of its subscriber base, lower SAC (Subscriber Acquisition Cost) and lower sales commission and advertising/marketing costs and expenses.

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NET EARNINGS

Net income totaled R$5.0 million in 1Q06 (R$0.0090/1,000 shares) (Annex I). Net income/ADR in the period was of US$0.0125. In 1Q05, the Company registered a net income of R$2.8 million, corresponding to R$0.0050/1,000 shares, net income per ADR amounted to R$0.0057.

INDEBTEDNESS

At the end of March, 2006, Brasil Telecom’s consolidated total debt was of R$4,649.5 million, 5.3% inferior than the amount registered at the end of December (Annex IX). As of March, 67.2% of the total debt corresponded to long-term debt (Annex X).

Brasil Telecom finished 1Q06 with R$1,031.5 million in cash and equivalents, against R$1,730.1 million in December. Such variation is mainly due to the payment of Interest on Shareholders’ Equity which amounted to R$386.4 million on January 13, 2006 and the payment of R$408.6 million to investment suppliers. The consolidated net debt corresponded to R$3,618.1 million, 13.8% superior to the net debt registered in December, 2005 (Annex IX).

On April 19, 2006, Brasil Telecom raised R$30 million with Fundo Constitucional Centro-Oeste (FCO). Such resources are destined to fulfill goals established by Anatel in the Mid-western region. The total term for this funding is five years, with one year of grace period. The cost of this debt is equivalent to 14% p.a. and shall be paid quarterly during the grace period and monthly during the period of amortization of the principal.

At the end of March, 2006, the foreign-currency-denominated debt totaled R$1,610.0 million, of which R$562.7 million were denominated in US dollars, R$283.4 million in currency basket and R$763.9 million in Yens (Annex IX). On March 31, 2006, 58.2% of our debt affected by exchange rate variation was hedged against exchange rate risk. Of our total debt excluding hedge adjustments, 11.9% was exposed to exchange rate variations.

Brasil Telecom’s consolidated debt had a year-to-date cost equivalent to 9.5% p.a., or 57.0% of the Domestic Interbank Rate.

At the end of March 2006, Brasil Telecom’s financial leverage ratio, represented by the ratio of its net debt to shareholders’ equity, was equal to 65.8%, against 57.8% in the previous quarter.

CAPEX

Brasil Telecom’s CAPEX totaled R$214.6 million in the 1Q06, of which R$209.4 million were invested in the fixed-line network and R$5.2 million in the mobile network (Annex VIII). In comparison to 4Q05, total investments decreased 72.6%, although they are in line with the estimated CAPEX for 2006.

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STOCK MARKET


Table 1: Stock Market Performance

	Closing Price	Performance

	as of	In 1Q06	In 12	In 24
	Mar/31/06	In 1Q06	months	months

Common Shares (BRTO3) (in R$/1,000 shares)	19.00	8.6%	49.8%	68.9%
Preferred Shares (BRTO4) (in R$/1,000 shares)	10.20	1.5%	2.7%	-7.9%
ADR (BTM) (in US$/ADR)	14.20	10.0%	26.7%	21.9%
Ibovespa (points)	37,952	13.4%	42.6%	71.4%
Itel (points)	971	2.0%	13.0%	8.6%
IGC (points)	4,239	15.9%	61.5%	133.5%
Dow Jones (points)	11,109	3.7%	5.8%	7.3%

Table 2: Theoretical Portfolio Participation – January / April



	Ibovespa	Itel	IGC

BRTO3	-	-	0.013%
BRTO4	2.207%	5.703%	0.557%

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SHAREHOLDING STRUCTURE

Table 3: Shareholding Structure



Mar 2006	Common Shares	%	Preferred Shares	%	Total	%

Brasil Telecom Participações	247,276,380,758	99.1%	116,685,184,225	38.2%	363,961,564,983	65.5%
ADR	-	0.0%	19,913,199,000	6.5%	19,913,199,000	3.6%
Treasury	-	0.0%	13,678,100,000	4.5%	13,678,100,000	2.5%
Other	2,320,668,784	0.9%	155,424,748,064	50.8%	157,745,416,848	28.4%

Total	249,597,049,542	100.0%	305,701,231,289	100.0%	555,298,280,831	100.0%



Dec 2005	Common Shares	%	Preferred Shares	%	Total	%

Brasil Telecom Participações	247,276,380,758	99.1%	116,685,184,225	38.2%	363,961,564,983	65.5%
ADR	-	0.0%	19,159,197,000	6.3%	19,159,197,000	3.5%
Treasury	-	0.0%	13,679,382,322	4.5%	13,679,382,322	2.5%
Other	2,320,668,784	0.9%	156,177,467,742	51.1%	158,498,136,526	28.5%

Total	249,597,049,542	100.0%	305,701,231,289	100.0%	555,298,280,831	100.0%

GENERAL SHAREHOLDERS’ MEETING

On April 28, 2006, at 10:00 a.m., Brasil Telecom S.A.’s shareholders held an Ordinary and Extraordinary General Shareholders’ Meeting to resolve the following matters:

Ordinary General Shareholders’ Meeting


	(1)	Take the Managers Accounts, examine, discuss and vote the Financial Statements and the Management Report, related to the fiscal year ended on December 31, 2005;
	(2)	Make a resolution on the proposal for the civil responsibility lawsuit, in compliance with Law 6,404/76;
	(3)	Make a resolution regarding the destination for the net income of the fiscal year and the distribution of dividends;
	(4)	Elect the effective and alternate members of the Fiscal Council, setting the individual remuneration of its members; and
	(5)	Elect the effective and alternate members of the Board of Directors due to the vacancy of the aforementioned positions, to complete the mandates.

Extraordinary General Shareholders’ Meeting


	(1)	Set the global amount for the compensation of the Company’s Management;
	(2)	Make a resolution on the proposal for the civil responsibility lawsuit, in compliance with Law 6,404/76, regarding the management’s acts which happened in fiscal years previous to 2005;
	(3)	Make a resolution regarding the Senior Management’s proposal to increase the Company’s authorized capital, pursuant to art. 6 of the By-Laws, rewriting the aforementioned article; and
	(4)	Make a resolution regarding the review of the Company’s By-Laws, related to the matters of articles 24, VIII and 35, according to the Management’s proposals, as well as to authorize the consolidation of the By-Laws; and
	(5)	Make a resolution on the Senior Management’s proposal for the issuance of debentures.

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All of the items above were approved by the present shareholders, noting that item 1 of the Ordinary General Shareholders’ Meeting was approved with express reservations (rejection) regarding the former management’s acts, relating to the period between January 1st and August 25, 2005.

For the Board of Directors, the following members were elected to complete the term of office: Mr. Ricardo Ferraz Torres, as effective member and Mr. Kevin Michael Altit as alternate member. Additionally, the holders of preferred shares with no voting rights with the right to elect, through a separate voting, an effective member and the respective alternate member, appointed Mr. Gregório Mancebo Rodrigues as an alternate member. The Company’s Board of Directors now presents the formation according to table in the next page:



Effective	Alternate

Sergio Spinelli Silva Junior (Chairman)	Alberto Ribeiro Güth
Pedro Paulo Elejalde de Campos	Kevin Michael Altit
Elemér André Surányi	Renato Carvalho do Nascimento
Ricardo Ferraz Torres	Adriana Duarte Chagastelles
André Urani	Carmen Sylvia Motta Parkinson
Jorge Luiz Sarabanda da Silva Fagundes	Célia Beatriz Padovan Pacheco
Antonio Cardoso dos Santos	Gregório Mancebo Rodriguez

For the Fiscal Council, the following members were elected: as effective members, Messrs. José Arthur Escodro, Carlos Alberto Caser, Roberto Henrique Gremler and as alternate members, Messrs. Hiram Bandeira Pagano Filho, Carlos Alberto Rosa and Bruno Oliva Girardi. Additionally, the holders of preferred shares with no voting rights with the right to elect, through a separate voting, an effective member and the respective alternate member, appointed Mr. Eduardo Grande Bittencourt as effective member and Mr. Francisco Sérgio Quintana da Rosa as the respective alternate member. The Company’s Fiscal Council now presents the following formation:



Effective	Alternate

José Arthur Escodro	Hiram Bandeira Pagano Filho
Carlos Alberto Caser	Carlos Alberto Rosa
Roberto Henrique Gremler	Bruno Oliva Girardi
Eduarde Grande Bittencourt	Francisco Sérgio Quintana da Rosa

RECENT DEVELOPMENTS

“Internet Toda Hora”

In the first quarter of 2006, Brasil Telecom launched Internet Toda Hora, a dial-up internet access plan with download speeds of 56 Kbps which allows unlimited access to the internet without exceeding pulses being charged, for a monthly tariff of R$29.90 (tax included). The associated ISPs supply an access number to its users, limiting the access to Internet Toda Hora subscribers. The launch of this products seeks to reach residential clients from classes C and D, clients who wish to control expenses related to dial-up internet access or clients who are not yet convinced of acquiring broadband access to the internet.

Page 15 of 29

Once again, BrT is the first to test converging technology

Brasil Telecom successfully concluded new tests with converging handsets of fixed-mobile telephony. This time, BrT used SIP/Wi-Fi technology and UTStarcom handsets. Such tests consolidate the Company’s strategy, since September 2004, when it concluded the first phase of tests with other converging mobile-fixed handsets, using Bluetooth class 1 technology.

The solution developed by Brasil Telecom for the converging handset uses both fixed and mobile network, depending on the physical position of the user. The mobile handset may be used from home or work, via fixed network. If the solution is in the company’s PABX, the employees may, for instance, make calls among each other from the mobile handsets as if it were a branch, whenever they are within the companies facilities.

Cancellation of the “Merger Agreement”

On May 02, 2006, Brasil Telecom received a letter from TIM International N.V. (“TIMINT”) and TIM Brasil Serviços e Participações S.A. (“TIMB”), informing the cancellation of the “Merger Agreement”, which was celebrated on April 28, 2005, among Brasil Telecom, TIMINT and TIMB.

The “Merger Agreement” is subject to an arbitration which was filed by Brasil Telecom against TIMINT and TIMB, according to Material Fact disclosed on March 16, 2006.

COMING EVENTS

Conference Call and Webcast: 1Q06 Results
Connection number: (+1 973) 935-2408
Access Code: 7338359 or Brasil Telecom
Link: http://www.brasiltelecom.com.br/ir/
Date: May 09 (Thursday)
Time: 11:30 a.m. (New York time)
04:30 p.m. (London time)
12:30 p.m. (Brasília time)

Page 16 of 29

FINANCIAL STATEMENTS

BRASIL TELECOM S.A.

Annex I: Consolidated Income Statement



R$ Million	1Q05	4Q05	1Q06	D Quarter	D 12 Months

GROSS REVENUES	3,468.7	3,809.4	3,654.9	-4.1%	5.4%
Fixed Telephony	2,901.1	3,004.3	2,888.9	-3.8%	-0.4%
Local Service	1,735.0	1,819.6	1,769.1	-2.8%	2.0%
Public Telephony	86.9	145.6	127.9	-12.2%	47.1%
Long Distance Service	755.1	706.1	703.9	-0.3%	-6.8%
Interconnection	164.6	148.4	108.5	-26.9%	-34.1%
Lease of Means	65.9	84.5	83.0	-1.8%	25.8%
Supplementary and Value Added Services	83.1	90.3	86.2	-4.6%	3.7%
Other	10.4	9.7	10.4	7.6%	0.2%
Mobile Telephony	147.0	252.4	227.6	-9.8%	54.8%
Data Transmission	420.6	552.8	538.4	-2.6%	28.0%

Deductions	(1,021.2)	(1,217.5)	(1,178.0)	-3.2%	15.4%
NET REVENUES	2,447.6	2,591.9	2,476.9	-4.4%	1.2%

COSTS & OPERATING EXPENSES	(1,616.7)	(2,275.9)	(1,646.6)	-27.7%	1.9%
Personnel	(151.1)	(161.6)	(189.2)	17.1%	25.1%
Materials	(78.6)	(164.9)	(83.9)	-49.2%	6.7%
Subcontracted Services	(489.8)	(606.2)	(540.9)	-10.8%	10.4%
Interconnection	(576.1)	(514.6)	(498.5)	-3.1%	-13.5%
Advertising and Marketing	(62.0)	(64.0)	(20.4)	-68.1%	-67.2%
Provisions and Losses	(140.2)	(492.2)	(187.9)	-61.8%	34.0%
Other	(118.8)	(272.5)	(126.0)	-53.8%	6.0%

EBITDA	830.9	316.0	830.3	162.8%	-0.1%
Depreciation and Amortization	(670.5)	(672.8)	(669.6)	-0.5%	-0.1%

OPERATING PROFIT BEFORE FINANCIAL
RESULT	160.3	(356.8)	160.6	N.A.	0.2%

Financial Result	(123.1)	(625.1)	(126.4)	-79.8%	2.7%
Financial Revenues	144.1	53.6	71.4	33.2%	-50.4%
Financial Expenses	(267.2)	(292.3)	(197.8)	-32.3%	-26.0%
Interest on Shareholders' Equity	-	(386.4)	-	N.A.	N.A.

OPERATING PROFIT AFTER FINANCIAL
RESULT	37.2	(981.9)	34.2	N.A.	-8.2%

Non-Operating Revenues (Expenses)	(35.6)	(40.3)	(2.7)	-93.4%	-92.5%
Goodwill Amortization - CRT Acquisition	(31.0)	(31.0)	-	N.A.	N.A.
Other	(4.6)	(9.3)	(2.7)	-71.3%	-41.4%

EARNINGS BEFORE INCOME AND SOCIAL
CONTRIBUTION TAXES	1.7	(1,022.2)	31.5	N.A.	N.A.

Income and Social Contribution Taxes	2.3	373.6	(25.6)	N.A.	N.A.

EARNINGS BEFORE PROFIT SHARING	4.0	(648.6)	5.9	N.A.	48.4%

Minority Interest	(1.2)	(3.7)	(0.9)	-75.4%	-23.7%

EARNINGS BEFORE REVERSION OF
INTEREST ON SHAREHOLDERS' EQUITY	2.8	(652.3)	5.0	N.A.	79.0%

Reversion of Interest on Shareholders' Equity	-	386.4	-	N.A.	N.A.

NET EARNINGS (LOSSES)	2.8	(265.9)	5.0	N.A.	79.0%

Page 17 of 29

Annex II: Consolidated Balance Sheet



R$ Million	Mar/05	Dec/05	Mar/06



CURRENT ASSETS	5,298.6	5,271.7	4,626.4

Cash and Equivalents	1,853.1	1,730.1	1,031.5
Accounts Receivables (Net)	2,186.8	2,152.8	2,149.0
Deferred and Recoverable Taxes	780.2	1,122.6	1,049.0
Other Recoverable Amounts	268.6	117.2	228.8
Inventory	137.5	83.0	80.3
Other	72.3	66.0	87.8

LONG TERM ASSETS	1,395.5	1,438.3	2,003.7

Loans and Financing	8.3	5.2	3.3
Deferred and Recoverable Taxes	790.1	1,225.6	1,236.3
Other	597.2	207.5	764.0

PERMANENT ASSETS	9,874.6	9,397.5	8,926.1

Investment (Net)	450.1	390.5	355.6
Property, Plant and Equipment (Net)	8,527.4	8,225.0	7,765.8
Property, Plant and Equipment (Gross)	24,757.2	26,094.2	26,220.4
Accumulated Depreciation	(16,229.9)	(17,869.3)	(18,454.5)
Deferred Assets (Net)	897.1	782.1	804.7

TOTAL ASSETS	16,568.7	16,107.4	15,556.1



CURRENT LIABILITIES	4,092.1	5,363.3	4,627.7

Loans and Financing	1,044.4	1,489.4	1,522.8
Suppliers	1,514.6	1,786.3	1,377.0
Taxes and Contributions	811.4	975.7	895.9
Dividends Payable	41.5	441.0	88.5
Provisions	339.0	265.1	361.2
Salaries and Benefits	116.1	78.2	74.8
Consignment for Third Parties	102.4	154.7	116.2
Authorization for Services Exploration	45.6	55.5	74.8
Other	77.1	117.4	116.4

LONG TERM LIABILITIES	5,935.0	5,146.3	5,327.7

Loans and Financing	4,060.3	3,418.8	3,126.8
Provisions	895.5	1,112.7	1,336.1
Taxes and Contributions	685.6	330.6	572.6
Authorization for Services Exploration	270.6	252.3	259.6
Other	23.1	31.9	32.6

DEFERRED INCOME	88.1	84.6	82.7

MINORITY INTEREST	31.6	16.7	16.4

SHAREHOLDERS' EQUITY	6,421.9	5,496.6	5,501.6

Capital Stock	3,435.8	3,435.8	3,435.8
Capital Reserves	1,517.6	1,517.6	1,517.6
Profit Reserves	287.7	287.7	287.7
Retained Earnings	1,335.6	410.3	415.3
Treasury Shares	(154.7)	(154.7)	(154.7)

TOTAL LIABILITIES	16,568.7	16,107.4	15,556.1

Page 18 of 29


Annex III: Cash Flow

R$ Million		1Q05	4Q05	1Q06	D Quarter	D 12 Meses

OPERATING ACTIVITIES
(+)	Net Income of the Period	2.8	(265.9)	5.0	N.A.	78.9%
(+)	Minority Participation	1.2	3.7	0.9	-75.4%	-23.7%
(+)	Items with no Cash Effects	1,240.8	1,822.8	1,207.1	-33.8%	-2.7%
	Depreciation and Amortization	701.8	699.9	671.6	-4.0%	-4.3%
	Losses with Accounts Receivable from Services	77.6	78.9	96.1	21.9%	23.9%
	Provision for Doubtful Accounts	27.3	78.6	16.6	-78.8%	-39.1%
	Provision for Contingencies	35.3	334.8	75.1	-77.6%	112.5%
	Provision for Pension Funds	5.5	172.3	7.2	-95.8%	31.8%
	Deferred Taxes	219.1	214.2	214.2	0.0%	-2.2%
	Result from the Write-off of Permanent Assets	6.7	12.2	0.9	-93.0%	-87.2%
	Financial Expenses	183.4	224.3	125.4	-44.1%	-31.6%
	Other Expenses/Revenues with no Cash Effects	(10.3)	-	-	N.A.	N.A.
(-)	Equity Changes	478.8	800.1	613.5	-23.3%	28.1%
	Clients' Accounts Receivable	180.2	(21.3)	109.0	N.A.	-39.5%
	Inventories	(36.5)	14.4	(2.8)	N.A.	-92.4%
	Court Deposits	(459.8)	(17.8)	10.9	N.A.	N.A.
	Personnel, Charges and Social Benefits	(6.1)	34.2	3.4	-90.0%	N.A.
	Accounts payable and Provisioned Expenses	6.2	(81.7)	38.6	N.A.	520.5%
	Taxes	509.7	698.8	272.2	-61.1%	-46.6%
	Provision for Contingencies	310.6	108.3	110.6	2.1%	-64.4%
	Provision for Pension Funds	25.4	24.3	34.2	40.8%	34.4%
	Other Assets and Liabilities' Accounts	(51.1)	41.0	37.5	-8.5%	N.A.

(=)	Cash Flow from Operating Activities	771.5	752.7	599.5	-20.4%	-22.3%


INVESTMENT ACTIVITIES
	Financial Investments	(0.2)	1.2	(0.0)	N.A.	-92.9%
	Investment Suppliers	(257.4)	220.1	(408.6)	N.A.	58.8%
	Funds from Sales of Permanent Assets	0.5	0.4	0.1	-71.2%	-73.9%
	Investments in Permanent Assets	(268.6)	(773.7)	(214.6)	-72.3%	-20.1%
(=)	Cash Flow from Investment Activities	(525.7)	(551.9)	(623.1)	12.9%	18.5%


FINANCING ACTIVITIES
	Dividens/Interests on Shareholders' Equity paid in the Period	(369.7)	(1.1)	(323.1)	N.A.	-12.6%
	Loans and Financing	(358.6)	56.9	(368.5)	N.A.	2.8%
	Loans Obtained	5.3	253.2	1.5	-99.4%	-71.0%
	Loans Paid	(147.0)	(136.3)	(165.5)	21.5%	12.6%
	Interest Paid	(216.9)	(60.0)	(204.5)	240.7%	-5.7%
	Acquisition of Own Shares	(62.3)	-	0.0	N.A.	N.A.
	Other Financing Flows	0.1	(16.0)	16.6	N.A.	17701.1%
(=)	Cash Flow from Financing Activities	(790.5)	39.8	(675.0)	N.A.	-14.6%



CASH FLOW OF THE PERIOD		(544.7)	240.6	(698.6)	N.A.	28.3%




	Cash and Cash Equivalents - current balance	1,853.1	1,730.1	1,031.5	-40.4%	-44.3%
	Cash and Cash Equivalents - previous balance	2,397.8	1,489.5	1,730.1	16.2%	-27.8%
	Variation in Cash and Cash Equivalents	(544.7)	240.6	(698.6)	N.A.	28.3%



	OPERATING CASH FLOW	771.5	752.7	599.5	-20.4%	-22.3%
(-)	Investments on Permanent Assets (includes Investment Suppliers)	(525.7)	(551.9)	(623.1)	12.9%	18.5%
(-)	Interest Paid	(216.9)	(60.0)	(204.5)	240.7%	-5.7%

(=) FREE CASH FLOW		29.0	140.8	(228.1)	N.A.	N.A.

Page 19 of 29


Annex IV: Consolidated Operating Gross Revenue


R$ Million	1Q05	4Q05	1Q06	D Quarter	D 12 Meses

GROSS REVENUES	3,468.7	3,809.4	3,654.9	-4.1%	5.4%

FIXED TELEPHONY	2,901.1	3,004.3	2,888.9	-3.8%	-0.4%
Local Service	1,735.0	1,819.6	1,769.1	-2.8%	2.0%
Activation	7.8	3.7	4.2	11.7%	-46.1%
Subscription	851.5	901.2	893.3	-0.9%	4.9%
Measured Service	340.4	378.1	355.6	-5.9%	4.5%
Lease of Facilities	0.4	0.4	0.3	-24.2%	-9.9%
Other	19.1	16.2	12.2	-24.8%	-36.0%
VC-1	516.0	520.0	503.5	-3.2%	-2.4%

Public Telephony	86.9	145.6	127.9	-12.2%	47.1%

Long Distance Service	755.1	706.1	703.9	-0.3%	-6.8%
Intra-Sector	347.4	315.1	312.2	-0.9%	-10.1%
Intra-Region	99.1	81.4	82.2	1.0%	-17.1%
Inter-Region	70.1	73.1	69.8	-4.5%	-0.5%
International / Borderline	15.0	14.3	12.7	-11.3%	-15.6%
VC-2	191.7	166.7	167.5	0.5%	-12.6%
Fixed Origin	75.4	69.8	70.2	0.6%	-6.9%
Mobile Origin	116.2	96.9	97.3	0.4%	-16.3%
VC-3	130.9	136.9	141.6	3.4%	8.2%
Fixed Origin	52.4	56.1	58.8	4.9%	12.2%
Mobile Origin	78.5	80.9	82.8	2.4%	5.6%

Interconnection	164.6	148.4	108.5	-26.9%	-34.1%
Fixed-Fixed	101.0	96.3	71.7	-25.6%	-29.0%
Mobile-Fixed	63.6	52.1	36.8	-29.3%	-42.2%

Lease of Means	65.9	84.5	83.0	-1.8%	25.8%

Supplementary and Value Added Services	83.1	90.3	86.2	-4.6%	3.7%

Other	10.4	9.7	10.4	7.6%	0.2%

MOBILE TELEPHONY	147.0	252.4	227.6	-9.8%	54.8%
Subscription	34.6	45.2	57.8	28.0%	67.2%
Utilization	57.4	68.8	79.4	15.3%	38.2%
Interconnection	6.4	17.5	26.1	49.4%	308.9%
Other Services	1.2	5.0	9.6	90.8%	691.4%
Merchandise Sales (Handsets and Accessories)	47.4	115.8	54.6	-52.8%	15.3%

DATA COMMUNICATIONS AND OTHER	420.6	552.8	538.4	-2.6%	28.0%
Fixed	420.0	540.3	521.6	-3.5%	24.2%
Mobile	0.6	12.4	16.8	35.6%	N.A.

Deductions	(1,021.2)	(1,217.5)	(1,178.0)	-3.2%	15.4%
NET REVENUES	2,447.6	2,591.9	2,476.9	-4.4%	1.2%

Page 20 of 29


Annex V: Consolidated Operating Costs and Expenses


R$ Million	1Q05	4Q05	1Q06	D Quarter	D 12 Meses

NET REVENUES	2,447.6	2,591.9	2,476.9	-4.4%	1.2%

Costs	(1,587.0)	(1,654.1)	(1,569.3)	-5.1%	-1.1%
Personnel	(37.3)	(45.2)	(58.6)	29.7%	57.1%
Materials	(69.0)	(152.8)	(72.0)	-52.8%	4.4%
Subcontracted Services	(770.2)	(741.4)	(721.9)	-2.6%	-6.3%
Interconnection	(576.1)	(514.6)	(498.5)	-3.1%	-13.5%
Other	(194.0)	(226.8)	(223.4)	-1.5%	15.1%
Depreciation and Amortization	(572.0)	(569.6)	(570.2)	0.1%	-0.3%
Other	(138.6)	(145.1)	(146.5)	1.0%	5.7%

GROSS PROFIT	860.5	937.8	907.6	-3.2%	5.5%

Sales Expenses	(265.8)	(344.6)	(261.6)	-24.1%	-1.6%
Personnel	(60.9)	(65.6)	(73.3)	11.7%	20.3%
Materials	(7.7)	(8.5)	(6.8)	-19.5%	-11.1%
Subcontracted Services	(190.4)	(264.5)	(168.2)	-36.4%	-11.6%
Advertising and Marketing	(62.0)	(64.0)	(20.4)	-68.1%	-67.2%
Other	(128.3)	(200.6)	(147.8)	-26.3%	15.2%
Depreciation and Amortization	(4.0)	(4.1)	(4.1)	-0.9%	3.9%
Other	(2.9)	(1.9)	(9.2)	398.0%	213.6%

General and Administrative Expenses	(193.8)	(187.3)	(202.0)	7.9%	4.2%
Personnel	(42.0)	(41.9)	(50.5)	20.5%	20.3%
Materials	(1.3)	(3.3)	(4.5)	36.3%	236.8%
Subcontracted Services	(136.2)	(132.3)	(137.8)	4.2%	1.2%
Depreciation and Amortization	(9.5)	(6.5)	(6.0)	-7.7%	-36.6%
Other	(4.9)	(3.3)	(3.1)	-3.6%	-35.5%

Information Technology	(109.8)	(129.9)	(115.9)	-10.7%	5.6%
Personnel	(10.9)	(8.8)	(6.7)	-24.0%	-38.6%
Materials	(0.6)	(0.4)	(0.5)	26.2%	-18.0%
Subcontracted Services	(31.2)	(46.5)	(31.8)	-31.6%	1.8%
Depreciation and Amortization	(60.9)	(66.8)	(69.7)	4.4%	14.5%
Other	(6.1)	(7.4)	(7.2)	-2.6%	18.5%

Provisions and Losses	(140.2)	(492.2)	(187.9)	-61.8%	34.0%
Doubtful Accounts	(104.9)	(157.4)	(112.8)	-28.4%	7.5%
Contingencies	(35.3)	(334.8)	(75.1)	-77.6%	112.5%

Other Operating Revenues (Expenses)	9.5	(140.6)	20.5	N.A.	116.1%
Goodwill Amortization	(24.2)	(25.7)	(19.6)	-23.7%	-19.0%
Other	33.7	(114.9)	40.1	N.A.	19.0%


OPERATING PROFIT BEFORE FINANCIAL RESULTS	160.3	(356.8)	160.6	N.A.	0.2%





R$ Million	1Q05	4Q05	1Q06	D Quarter	D 12 Meses

COSTS AND OPERATING EXPENSES	(2,287.2)	(2,948.7)	(2,316.3)	-21.4%	1.3%
Depreciation and Amortization	(670.5)	(672.8)	(669.6)	-0.5%	-0.1%
Interconnection	(576.1)	(514.6)	(498.5)	-3.1%	-13.5%
Subcontracted Services	(489.8)	(606.2)	(540.9)	-10.8%	10.4%
Personnel	(151.1)	(161.6)	(189.2)	17.1%	25.1%
Provisions and Losses	(140.2)	(492.2)	(187.9)	-61.8%	34.0%
Materials	(78.6)	(164.9)	(83.9)	-49.2%	6.7%
Advertising and Marketing	(62.0)	(64.0)	(20.4)	-68.1%	-67.2%
Other	(118.8)	(272.5)	(126.0)	-53.8%	6.0%

Page 21 of 29


Annex VI: EBITDA Margin – Gains and Losses


R$ Million	1Q05	Vertical	4Q05	Vertical	1Q06	Vertical

GROSS REVENUES	3,468.7	141.7%	3,809.4	147.0%	3,654.9	147.6%
Fixed Telephony	2,901.1	118.5%	3,004.3	115.9%	2,888.9	116.6%
Local Service	1,735.0	70.9%	1,819.6	70.2%	1,769.1	71.4%
Public Telephony	86.9	3.6%	145.6	5.6%	127.9	5.2%
Long Distance Service	755.1	30.9%	706.1	27.2%	703.9	28.4%
Interconnection	164.6	6.7%	148.4	5.7%	108.5	4.4%
Lease of Means	65.9	2.7%	84.5	3.3%	83.0	3.3%
Supplementary and Value Added Services	83.1	3.4%	90.3	3.5%	86.2	3.5%
Other	10.4	0.4%	9.7	0.4%	10.4	0.4%
Mobile Telephony	147.0	6.0%	252.4	9.7%	227.6	9.2%
Data Transmission	420.6	17.2%	552.8	21.3%	538.4	21.7%

Deductions	(1,021.2)	-41.7%	(1,217.5)	-47.0%	(1,178.0)	-47.6%
NET REVENUES	2,447.6	100.0%	2,591.9	100.0%	2,476.9	100.0%

COSTS & OPERATING EXPENSES	(1,616.7)	-66.1%	(2,275.9)	-87.8%	(1,646.6)	-66.5%
Personnel	(151.1)	-6.2%	(161.6)	-6.2%	(189.2)	-7.6%
Materials	(78.6)	-3.2%	(164.9)	-6.4%	(83.9)	-3.4%
Subcontracted Services	(489.8)	-20.0%	(606.2)	-23.4%	(540.9)	-21.8%
Interconnection	(576.1)	-23.5%	(514.6)	-19.9%	(498.5)	-20.1%
Advertising and Marketing	(62.0)	-2.5%	(64.0)	-2.5%	(20.4)	-0.8%
Provisions and Losses	(140.2)	-5.7%	(492.2)	-19.0%	(187.9)	-7.6%
Other	(118.8)	-4.9%	(272.5)	-10.5%	(126.0)	-5.1%

EBITDA	830.9	33.9%	316.0	12.2%	830.3	33.5%


Annex VII: Adjusted EBITDA

R$ Million	4Q05	1Q06	D Quarter

Net Revenues	2,591.9	2,476.9	-4.4%
EBITDA	316.0	830.3	162.8%
EBITDA Margin	12.2%	33.5%	21.3 p.p.
Extraordinary Items	559.0	44.1	-92.1%
Contingencies with Risks with Legal Processes	197.8	-	N.A.
Actuarial Calculation Adjustment	171.1	-	N.A.
Fiscal Credit Write-off	76.9	-	N.A.
Co-billing agreement	73.8	-	N.A.
Labor related Severance	-	44.1	N.A.
Other	39.4	-	N.A.
Adjusted EBITDA	874.9	874.4	-0.1%
Adjusted EBITDA Margin	33.8%	35.3%	1.5 p.p.

Page 22 of 29


Annex VIII: CAPEX


R$ Million	1Q05	4Q05	1Q06	D Quarter	D 12 Meses

Network Expansion	65.0	349.2	99.5	-71.5%	53.0%
Conventional Telephony	16.5	111.3	0.3	-99.7%	-98.1%
Transmission Backbone	3.9	42.5	2.4	-94.3%	-37.9%
Data Network	42.0	170.7	33.9	-80.1%	-19.3%
Intelligent Network	0.4	9.0	0.7	-92.1%	88.2%
Network Management Systems	-	12.9	0.4	-97.0%	N.A.
Other	2.2	2.9	61.7	N.A.	N.A.
Network Operation	58.3	105.7	50.9	-51.9%	-12.7%
Public Telephony	1.2	1.3	1.4	9.1%	17.0%
Information Technology	19.7	78.8	8.5	-89.2%	-56.9%
Expansion Personnel	21.0	22.1	26.9	21.5%	28.3%
Other	26.4	21.0	22.3	6.2%	-15.7%

Expansion Financial Expenses	4.6	7.1	-	-100.0%	-100.0%

Total - Fixed Telephony	196.2	585.2	209.4	-64.2%	6.7%



R$ Million	1Q05	4Q05	1Q06	D Quarter	D 12 Meses

Total - Mobile Telephony	85.9	197.6	5.2	-97.4%	-94.0%



Total CAPEX	282.2	782.8	214.6	-72.6%	-23.9%


Annex IX: Indebtedness


Debt (R$ Million)	Mar 2005	Dec 2005	Mar 2006	D Quarter	D 12 Meses

Short Term	1,044.4	1,489.4	1,522.8	2.2%	45.8%
In R$	916.0	1,271.9	1,243.7	-2.2%	35.8%
In US$	49.5	43.6	23.2	-46.8%	-53.2%
In Yen	0.8	45.8	80.2	75.1%	N.A.
In Currency Basket	52.5	70.7	72.4	2.4%	37.9%
Hedge Adjustment	25.6	57.4	103.3	80.0%	304.0%
Long Term	4,060.3	3,418.8	3,126.8	-8.5%	-23.0%
In R$	2,493.3	1,950.6	1,795.9	-7.9%	-28.0%
In US$	677.9	588.6	537.8	-8.6%	-20.7%
In Yen	538.2	386.1	319.3	-17.3%	-40.7%
In Currency Basket	211.7	201.9	173.7	-14.0%	-17.9%
Hedge Adjustment	139.2	291.7	300.1	2.9%	115.6%
Total Debt	5,104.6	4,908.2	4,649.5	-5.3%	-8.9%
(-) Cash	1,853.1	1,730.1	1,031.5	-40.4%	-44.3%
Net Debt	3,251.5	3,178.1	3,618.1	13.8%	11.3%
(-) Inter Company with BRP	1,005.8	619.3	585.2	-5.5%	-41.8%
Net Debt Ex-Inter Company with BRP	2,245.7	2,558.8	3,032.9	18.5%	35.1%

Page 23 of 29


Annex X: Indebtedness


Dec/05	Currency	Annual Cost	Maturity	% Total	Balance (in R$ Million)


Short Term				30.3%	1,523
Private Debenture (BRP)	R$	100% CDI	jul/2006		534
Inter Company (BRP)	US$	1.75%	jul/2014		7
BNDES	R$	TJLP + 6.5%	dec/2007		16
BNDES	R$	TJLP + 5.85%	dec/2007		360
BNDES	R$	TJLP + 3.85%	oct/2007		83
BNDES	R$	Basket + 6.5%	dec/2007		29
BNDES	R$	Basket + 3.85%	nov/2007		10
BNDES	R$	Basket + 5.5%	apr/2011		34
BNDES	R$	TJLP + 5.5%	apr/2011		220
BRDE	R$	IGP-M+12.0%	sep/2006		5
FCO	R$	14%	jan/2008		5
Debentures 3^rdPublic Issuance	R$	CDI + 1.0%	jul/2009		20
Bonds - US$ 200 MM	US$	9.38%	feb/2014		5
Financial Institutions II	US$	Lib6 + 0.5%	jul/2008-jul/2013		11
Financial Institutions III	Yen$	Jibor6 + 1.92%	mar/2011		80
Hedge Adjustment					103
Long Term				69.7%	3,127
Inter Company (BRP)	R$	1.75%	jul/2014		45
BNDES	R$	TJLP + 6.5%	dec/2007		12
BNDES	R$	TJLP + 5.85%	dec/2007		358
BNDES	R$	TJLP + 3.85%	oct/2007		61
BNDES	R$	Basket + 6.5%	dec/2007		21
BNDES	R$	Basket + 3.85%	nov/2007		7
BNDES	R$	Basket + 5.5%	apr/2011		145
BNDES	R$	TJLP + 5.5%	apr/2011		840
FCO	R$	14%	jan/2008		4
BRB - GSM	R$	2.40%	jan/2034		18
BRB - Fixa	R$	2.40%	jan/2034		4
Debentures 3^rdPublic Issuance	R$	CDI + 1,0%	jul/2009		500
Bonds - US$ 200 MM	US$	9.38%	feb/2014		434
Financial Institutions I	US$	Lib6 + 0.5%	jul/2008-jul/2013		36
Financial Institutions II	US$	Jibor6 + 1,92%	mar/2011		319
Financial Institutions III	US$	3.36%	feb/2009		1
Financial Institutions IV	US$	0.00%	dec/2015		22
Suppliers II	US$	1.75%	feb/2014		1
Hedge Adjustment					300
Total Debt				100.0%	4,650

Page 24 of 29


Annex XI: Long Term Debt Amortization Schedule


Maturity	% Long Term Debt

2007	21.1%
2008	16.5%
2009	29.3%
2010	13.2%
2011	4.1%
2012	0.2%
2013 and after	15.6%


Annex XII: Consolidated Financial Result


R$ Million	1Q05	4Q05	1Q06	D Quarter	D 12 Meses

Financial Revenue	195.1	105.2	116.1	10.3%	-40.5%
Local Currency	163.08	135.6	111.3	-17.9%	-31.8%
Foreign Currency	32.04	(30.4)	4.8	-115.9%	-84.9%
Financial Expense	(247.3)	(303.2)	(191.4)	-36.9%	-22.6%
Local Currency	(168.6)	(285.5)	(150.3)	-47.3%	-10.9%
Foreign Currency	(78.7)	(17.7)	(41.0)	131.3%	-47.8%
Interest on Shareholders' Equity	-	(479.1)	-	N.A.	N.A.

Financial Result	(52.2)	(677.1)	(75.3)	-88.9%	44.2%


Annex XIII: Consolidated Accounts Receivable


	Mar/05	Jun/05	Sep/05	Dec/05	Mar/06

Total (R$ Million)	2,456.8	2,517.0	2,614.7	2,514.3	2,527.1
Due	63.3%	65.0%	63.2%	65.0%	62.7%
Overdue (up to 30 days)	15.7%	15.6%	16.8%	15.8%	16.4%
Overdue (between 31-60 days)	6.4%	5.8%	5.8%	5.2%	6.2%
Overdue (between 61-90 days)	4.3%	3.5%	3.9%	3.3%	3.9%
Overdue (over 90 days)	10.3%	10.1%	10.3%	10.7%	10.7%

Page 25 of 29


Annex XIV: Traffic

TRAFFIC	1Q05	4Q05	1Q06	D Quarter	D 12 Meses

Exceeding local pulses (million)	2,304.8	2,391.4	2,291.2	-4.2%	-0.6%

VC-1 (million minutes)	807.0	801.8	744.7	-7.1%	-7.7%

Domestic long distance - DLD (million minutes)	1,616.4	1,438.5	1,426.9	-0.8%	-11.7%

VC-2 (million minutes)	175.8	146.4	152.7	4.3%	-13.1%
VC-3 (million minutes)	106.1	101.4	104.9	3.5%	-1.1%


Annex XV - Indicators


WIRELINE NETWORK	1Q05	4Q05	1Q06	D Quarter	D 12 Meses

Lines installed (thousand)	10,778.3	10,816.3	10,814.3	0.0%	0.3%
Additional lines installed (thousand)	41.1	20.3	(2.0)	N.A.	N.A.

Lines in service - LIS (thousand)	9,512.3	9,560.1	9,543.1	-0.2%	0.3%
Residential (thousand)	6,379.5	6,102.9	6,042.8	-1.0%	-5.3%
Non-residential (thousand)	1,440.2	1,439.2	1,432.6	-0.5%	-0.5%
Public phones (thousand)	296.4	296.9	295.2	-0.6%	-0.4%
Pre-paid (thousand)	311.2	313.8	316.6	0.9%	1.7%
Hybrid (thousand)	475.5	783.0	825.6	5.5%	73.6%
Other (including PBX) (thousand)	619.6	624.4	630.1	0.9%	1.7%
Additional lines in service (thousand)	9.2	11.1	(17.0)	N.A.	N.A.
Average lines in service (thousand)	9,507.7	9,554.6	9,551.6	0.0%	0.5%

LIS/100 Inhabitants	22.4	22.3	22.2	-0.6%	-1.0%
Public Telephones/1,000 Inhabitants	7.0	6.9	6.9	-0.6%	-2.0%
Public Telephones/100 Lines Installed	2.7	2.7	2.7	1.1%	1.1%

Utilization rate	88.3%	88.4%	88.2%	-0.2 p.p.	0.0 p.p.

Digitalization rate	99.3%	100.0%	100.0%	0.0 p.p.	0.7 p.p.

Teledensity (LIS/100 inhabitants)	22.4	22.3	22.2	-0.6%	-1.1%

ADSL accesses in service (thousand)	625.3	1,013.9	1,084.1	6.9%	73.4%




PRODUCTIVITY	1Q05	4Q05	1Q06	D Quarter	D 12 Meses

# of employees - Fixed Telephony	5,685	5,803	5,420	-6.6%	-4.7%
Average # of employees	5,743	5,794	5,612	-3.1%	-2.3%
LIS/employee	1,673	1,647	1,761	6.9%	5.2%

Gross revenue/average # of employees/month (R$ thousan	168.4	172.9	171.6	-0.7%	1.9%
EBITDA/average # of employees/month (R$ thousand)	48.2	18.2	49.3	171.3%	2.3%
Net earnings/average # of employees/month (R$ thousand)	0.2	(15.3)	0.3	N.A.	83.2%

Exceeding local pulses/average LIS/month	80.8	83.4	80.0	-4.2%	-1.0%
DLD minutes/average LIS/month	28.3	28.0	26.0	-7.1%	-8.2%
Fixed-mobile minutes/average LIS/month	38.2	36.6	35.0	-4.5%	-8.4%

Gross revenue/average LIS/month (R$)	101.7	104.8	100.8	-3.8%	-0.9%
EBITDA/average LIS/month (R$)	29.1	11.0	29.0	162.9%	-0.5%
Net earnings/average LIS/month (R$)	0.1	(9.3)	0.2	N.A.	78.2%




PROFITABILITY	1Q05	4Q05	1Q06	D Quarter	D 12 Meses

EBITDA margin	33.9%	12.2%	33.5%	21.3 p.p.	-0.4 p.p.

Net margin	0.1%	-10.3%	0.2%	10.5 p.p.	0.1 p.p.

Return on equity - ROE	0.0%	-4.8%	0.1%	4.9 p.p.	0.0 p.p.




CAPITAL STRUCTURE	1Q05	4Q05	1Q06	D Quarter	D 12 Meses

Cash and cash equivalents (R$ million)	1,853	1,730	1,031	-40.4%	-44.3%

Total debt (R$ million)	5,115	4,908	4,650	-5.3%	-9.1%
Short term debt	20.4%	30.3%	32.8%	2.4 p.p.	12.3 p.p.
Long term debt	79.6%	69.7%	67.2%	-2.4 p.p.	-12.3 p.p.

Net debt (R$ million)	3,261	3,178	3,618	13.8%	10.9%

Debt with BRP (inter-company + debenture) (R$ million)	1,006	619	585	-5.5%	-41.8%
Net debt excluding debt with BRP (R$ million)	2,256	2,559	3,033	18.5%	34.5%

Shareholders' equity (R$ million)	7,422	5,497	5,502	0.1%	-25.9%

Net debt/shareholders' equity	43.9%	57.8%	65.8%	7.9 p.p.	21.8 p.p.
Net debt excluding debt with BRP/shareholders' equity	30.4%	46.6%	55.1%	8.6 p.p.	24.7 p.p.

Page 26 of 29

BRASIL TELECOM MOBILE


Annex XVI: Income Statement


R$ Million	1Q05	4Q05	1Q06	D Quarter	D 12 Meses

GROSS REVENUES	182.5	340.4	329.5	-3.2%	80.5%
Subscription	34.6	45.2	57.8	28.1%	67.2%
Utilization	57.4	68.8	85.9	24.8%	49.7%
Interconnection	41.3	93.1	104.6	12.3%	153.1%
Other Revenues	1.2	5.1	9.6	88.8%	N.A.
Data Transmission	0.6	12.4	16.8	36.1%	N.A.
Merchandise Sales (Handsets and Accessories)	47.4	115.9	54.6	-52.8%	15.3%
Deductions	(50.9)	(98.4)	(106.9)	8.6%	110.0%
NET REVENUES	131.6	242.0	222.6	-8.0%	69.1%

COSTS & OPERATING EXPENSES	(279.4)	(409.1)	(262.9)	-35.7%	-5.9%
Personnel	(21.9)	(25.0)	(21.4)	-14.2%	-2.2%
Materials	(59.7)	(140.4)	(60.8)	-56.7%	1.9%
Subcontracted Services	(61.4)	(116.9)	(85.5)	-26.8%	39.3%
Interconnection	(37.3)	(27.0)	(24.2)	-10.3%	-35.0%
Advertising and Marketing	(35.5)	(41.6)	(7.6)	-81.8%	-78.6%
Provisions and Losses	(6.2)	(13.7)	(11.0)	-19.6%	78.5%
Other	(57.4)	(44.5)	(52.3)	17.6%	-8.9%

EBITDA	(147.8)	(167.1)	(40.3)	-75.9%	-72.7%
Depreciation and Amortization	(53.1)	(72.0)	(76.7)	6.6%	44.6%


OPERATING PROFIT BEFORE FINANCIAL RESULT	(200.9)	(239.1)	(117.1)	-51.0%	-41.7%

Financial Result	(10.0)	(24.1)	(8.7)	-64.0%	-13.7%
Financial Revenues	4.0	4.7	5.2	10.1%	28.3%
Financial Expenses	(14.1)	(28.8)	(13.8)	-51.9%	-1.7%


OPERATING PROFIT AFTER FINANCIAL RESULT	(210.9)	(263.2)	(125.7)	-52.2%	-40.4%

Non-Operating Revenues (Expenses)	-	(6.3)	(0.4)	-94.2%	N.A.

EARNINGS BEFORE INCOME AND SOCIAL
CONTRIBUTION TAXES	(210.9)	(269.5)	(126.1)	-53.2%	-40.2%

Income and Social Contribution Taxes	85.7	91.5	42.6	-53.4%	-50.2%

EARNINGS BEFORE PROFIT SHARING	(125.2)	(178.0)	(83.5)	-53.1%	-33.3%

EARNINGS BEFORE REVERSION OF INTEREST ON
SHAREHOLDERS' EQUITY	(125.2)	(178.0)	(83.5)	-53.1%	-33.3%

Reversion of Interest on Shareholders' Equity	-	-	-	N.A.	N.A.

NET EARNINGS (LOSSES)	(125.2)	(178.0)	(83.5)	-53.1%	-33.3%


Obs.: The values presented in this Income Statement do not consider inter-company elimination with Brasil Telecom S.A.

Page 27 of 29


Annex XVII: ARPU Calculation – Mobile Telephony

R$ Thousands	1Q05	2Q05	3Q05	4Q05	1Q06


(+) Gross Revenues	182.5	211.0	255.3	340.4	329.5
(-) Handsets	(47.4)	(66.7)	(69.4)	(115.8)	(54.6)

Gross Service Revenues	135.1	144.3	185.9	224.6	274.8
(-) Taxes and Deductions	(36.2)	(39.2)	(57.2)	(69.2)	(87.4)

Net Service Revenues	99.0	105.1	128.8	155.4	187.4
(-) Net Revs Public Payphones + Roaming	(27.3)	(8.3)	(0.9)	(1.4)	(0.9)

Quarterly Net Revenues	71.6	96.8	127.8	154.0	186.4
Monthly Net Revenues	23.9	32.3	42.6	51.3	62.1
Average Number of Clients	815.6	1,180.5	1,504.1	1,889.5	2,340.5

ARPU (R$)	29.3	27.3	28.3	27.2	26.6

1Q05 and 2Q05 include revenue incurring from “Brasil Virtual Cel”.


Annex XVIII: Operating Data


Key Operational Data	1Q05	4Q05	1Q06	D Quarter	D 12 Meses

Clients	1,003.7	2,212.8	2,460.0	11.2%	145.1%
Post-Paid	322.5	693.0	820.2	18.4%	154.3%
Pre-Paid	681.1	1,519.8	1,639.7	7.9%	140.7%
Gross Additions	405.6	661.2	398.9	-39.7%	-1.6%
Post-Paid	122.8	260.3	151.6	-41.8%	23.5%
Pre-Paid	282.8	400.9	247.3	-38.3%	-12.5%
Cancellations	24.2	124.6	151.7	21.8%	N.A.
Post-Paid	6.0	23.9	24.4	1.9%	306.0%
Pre-Paid	18.2	100.7	127.4	26.5%	599.9%
Annualized Churn	11.9%	25.6%	26.0%	0.3 p.p.	14.1 p.p.
Post-Paid	9.1%	16.6%	12.9%	-3.8 p.p.	3.8 p.p.
Pre-Paid	13.3%	29.4%	32.3%	2.8 p.p.	19.0 p.p.
SAC	188.8	187.7	136.6	-27.2%	-27.7%
Market Share	4.8%	8.7%	9.4%	0.7 p.p.	4.6 p.p.
Served Localities	626	782	782	0.0%	24.9%
% of Population Covered	81%	86%	86%	-0.1 p.p.	4.9 p.p.
Base Stations	1,695	2,117	2,123	0.3%	25.3%
Switches	6	8	8	0.0%	33.3%
Employees	918	1,069	735	-31.2%	-19.9%

Page 28 of 29

GLOSSARY

ADSL: Asymmetrical Digital Subscriber Line. System that allows broadband signal transmission through metallic telephone cables. It is the most common DSL technology, which represents a midway transition to totally optic networks.

ARPU: Average Revenue Per User. It is an indicator used in telecom industry which calculates the average revenue per user.

CAPEX: Capital Expenditure. The investments made by a company.

EBITDA: Earnings Before Interests, Taxes, Depreciation and Amortization.

GSM: Global System for Mobile communications. GSM is the most used technological standard by mobile operators in the world. This feature allows its users to move around freely and easily with their handsets. The price of GSM handsets is also more attractive, the network is safer and there is a consistent technological evolution.

JSCP (Interest on Shareholders’ Equity): Shareholder remuneration option, calculated from the Shareholders’ Equity and limited, for taxes deductibility effects, to the variation of the long term interest rates. The fiscal benefit is due to the reduction of the calculation basis of the income tax and social contribution on the net income, once the interest on shareholders’ equity represent deductible expenses in the application of these resources.

LIS: Lines in Service. All the lines in a plant that are effectively being used.

SAC: Subscriber Acquisition Cost. It is the average amount spent by a company to acquire a new subscriber.

TUP (Public Phone): Public terminals which use phone cards (or collect calls) to make calls.

Financial Leverage Ratio: Net Debt / Shareholders’ Equity

This document contains forward-looking statements. Such statements do not constitute facts occurred in the past and reflect the expectations of the Company's managers only. The words "anticipates," "believes," "estimates," "expects," "forecasts," "intends," "plans," "predicts," "projects" and "aims", as well as other similar words, are intended to identify those forward-looking statements, which obviously involve risks or uncertainties predicted or not by the Company. Accordingly, the future results of the Company’s operations may differ from the current expectations, and the reader should not rely exclusively on these forward-looking statements. Forward-looking statements speak only as of the date they are made, and the Company does not undertake any obligation to update them in light of new information or future developments

Page 29 of 29

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: May 9, 2006

BRASIL TELECOM S.A.

By:	/S/ Charles Laganá Putz
	Name: Charles Laganá Putz Title: Chief Financial Officer