4Q13 results. Rio de Janeiro, February Oi S.A. 0

Transcription

1 results Rio de Janeiro, February 2014 Oi S.A. 0

2 IMPORTANT NOTICE This release contains forward-looking statements, according to the U.S. Private Securities Litigation Reform Act of Statements that are not historical facts, including statements about perspectives and expectations, are forward-looking statements. The words "anticipates", "believes", "estimates", "expects", "forecasts", "intends", "plans", and similar terms, when related to the Company or its management, indicate forward-looking statements. These statements reflect the current view of management and are subject to various risks and uncertainties. These statements are based on various assumptions and factors, including general economic, market, industry, and operational factors. Any changes to these assumptions or factors may lead to practical results different from current expectations. Excessive reliance should not be placed on those statements. Forward-looking statements relate only to the date they are made, and the Company is not obligated to update them as new information or future developments arise. Oi S.A. 1

3 Results - Highlights Resilient performance with improving customer churn Operational highlights Thousand RGUs * 3Q13 q.o.q 4Q12 y.o.y Total 74,466 74, % 74, % Residential Fixed Line Broadband Pay TV 17,837 11,750 5, ,336 12,091 5, % -2.8% -1.5% -8.8% 18,337 12,478 5, % -5.8% +3.1% +9.5% Personal Mobility Prepaid Postpaid 47,727 41,019 6,708 47,337 40,676 6, % +0.8% +0.7% 46,305 39,832 6, % +3.0% +3.6% Corporate/SMEs Fixed Line Broadband Mobile 8,246 5, ,511 8,542 5, , % -2.2% +1.1% -6.9% 8,971 5, , % -5.8% +6.1% -15.0% Public Telephones % % *RGUs include the impact of the database cleanup in Oi S.A. 2

4 Results - Highlights better revenue trends to prior quarter and stable margins Financial highlights R$ million 3Q13 q.o.q 4Q12 y.o.y Net Revenue 7,209 7, % 7, % Residential 2,606 2, % 2, % Personal Mobility 2,389 2, % 2, % Service / Customer 1 1,737 1, % 1, % Corporate/SMEs 2,117 2, % 2, % OPEX 5,210 5, % 5, % Provision for bad debt % % Personnel % % Sales commission % % Routine EBITDA 1,999 1, % 2, % Routine EBITDA Margin 27.7% 27.7% 0.0p.p. 29.7% -2.0p.p. Net Income 1, % % Capex 1,515 1, % 2, % Routine EBITDA-Capex % % 1 - Includes subscriptions, outgoing calls, mobile long distance, roaming, data and value added 2 Includes impact of Globenet disposal Oi S.A. 3

5 Results - Highlights Further progress towards changing the cash flow profile Routine EBITDA R$ million 1,633 1, % 1, % Net debt variation R$ million (+) Refis (R$ 709 million) Dividends (R$ 476 million) (-) Fixed towers (R$ 687 million) 2Q13 3Q13 29, , ,416 Routine EBITDA - CAPEX R$ million +13.6% x Net Debt 3Q13 Operational Other Net Debt 2Q13 3Q13 Oi S.A. 4

6 BUSINESS PERFORMANCE Oi S.A. 5

7 Results - Brazil Brazil offers sizeable telecoms opportunity A, B and C income classes population million Broadband penetration % households Pay TV penetration % households Mobile Data* penetration % population Mobile voice penetration % population +59 million pp +17pp +54pp +30pp Argentina 43 Argentina 73 Argentina 43 Argentina 145 Portugal 57 Portugal 79 Portugal 109 Portugal E USA 81 USA 86 USA 85 USA 114 * Include WCDMA, HSPA, LTE, TD-SCDMA, CDMA2000 EV-Do and WiMax mobile calls Source: Teleco, Yankee Group; Screen Digest; Pyramid; ANACOM, Pyramid Research; OVUM (Mobile Technology Split Forecast: (August 2012) Oi S.A. 6

8 Results - Telecom Market Consumption varies by city and thus a larger footprint is required to tap growth Number of municipalities* 4,749 GDP growth CAGR Service penetration Percentage of households Broadband Pay-TV 11.2% 9.9% 8.2% High potential municipalities 4,570 Municipalities with developed telecoms % 40.7% 36.0% Data base: August/13 * Region 1 and 2 Souce: MCM Consultores, CityNav Brasil, IBGE, CityNav Brasil and Oi analysis Oi S.A. 7

9 Results - Oi - Footprint Oi with its unique footprint will play a pivotal role in increasing penetration of fixed and mobile internet and Pay TV 330,000 Km of Fiber Present in all Brazilian states and in 5,477 municipalities** 7x more municipalities with fixed network than the 2nd operator* Around 12 Mn households with voice and/or internet Coverage of 2G / 3G and 4G and more than 520,000 Wi-fi hotspots 1.3x more km of Fiber than the 2nd operator* *April/12 ** Includes Region 1, 2 and 3 Oi S.A. 8

10 Results - Oi s Priorities KEY Business PRIORITIES Customers Consolidation of business model and future growth Operations Operational excellence with regional plans for network and infrastructure, network operation, field force and IT optimization Culture Teamwork, clear leadership and greater empowerment and responsibility for delivery on results Finance Lower unit costs and smarter spending on capex Asset disposals Focus on Cash flow Oi S.A. 9

11 Results - Oi s Priorities KEY Business PRIORITIES Customers Consolidation of business model and future growth Culture Operations Operational excellence with regional plans for network and infrastructure, network operation, field force and IT optimization Teamwork, clear leadership and greater empowerment and responsibility for delivery on results Finance Lower unit costs and smarter spending on capex Asset disposals Focus on Cash flow Oi S.A. 10

12 Results - Residential Growing penetration of double and triple play Households with more than 1P % +5p.p. Voluntary fixed line churn % 1P - fixed line 2P - fixed line + broadband 3P - Oi Conta Total Jan/13 Dec/13 53 ARPU R$ +4.5% % 4Q12 1Q13 2Q13 3Q13 4Q12 3Q13 Oi S.A. 11

13 VALUE ADDED Results - Residential Bundled offers enhance value proposition Bundling fixed voice, broadband and TV with postpaid mobile voice and data Fixed line voluntary churn Indexed Bundle fixed voice with prepaid mobile 4Q12 Oi S.A. 12

14 Results - Residential New Pay tv offer will further enrich triple play bundle Oi reduced its sales efforts in the past months in anticipation of the launch of new satellite s offer in 1H14 Pay TV RGUs Thousand 757 4Q Q % Pay TV ARPU Indexed On average 35% of new customers are upselling within 6 months Pay TV upselling Penetration of Base indexed 100 Movies Extra room HD package Q12 4Q12 Oi S.A. 13

15 Results - Residential Consumer quality drives value and sales are improving Fixed line Indexed Sales Broadband Indexed Sales Pay TV Indexed Sales Mis-sales Mis-sales Mis-sales Jul/13 Jan/14 Jul/13 Jan/14 Jul/13 Jan/14 Segmented credit analysis system per point of sales and product Tighter control of IT systems Improved monitoring of sales channels Audit of points of sales Oi S.A. 14

16 Results - Residential Focus on improving processes and quality of contract customers RGUs thousand Revenue Indexed -2.8% +2.1% +0.2% -1.1% 12,091 11, % 5,336 5, % 829 3Q13 3Q13 3Q13 Fixed voice Broadband Pay TV Residential revenues % q.o.q 3Q13 3Q13 3Q Fixed line Broadband Pay TV 4Q12 1Q13 2Q13 3Q13 Oi S.A. 15

17 Results - Personal Mobility Prepaid continues to drive growth, with record recharges in Launch of new prepaid plans Active campaign management directs promotions to stimulate recharges Consistent clean up of customer base to improve profitability Recharges Indexed +5.3% Prepaid RGUs Thousand +3.0% 39,832 40,676 41, % 4Q12 3Q13 4Q12 Oi S.A. 16

18 Results - Personal Mobility New PROMOTION AIMED AT STIMULATING USAGE during the month Recharges R$13 Offer valid for 15 days R$18 Offer valid for 25 days R$25 Offer valid for 30 R$0.10 / day Charge only if service is used 30 min / day To any Oi mobile and Oi fixed line in Brazil R$0.50 / day Charge only if service is used SMS* To any operator R$0.50 / day Charge only if service is used Unlimited Internet 2G/3G *500 on-net SMS per day and 30 SMS to other operators ** Offer example of Rio de Janeiro State Oi S.A. 17

19 Results - Personal Mobility New offer targeting the YOUTH SEGMENT 60 min / day To any Oi mobile in Brasil SMS* To any R$0.99 / day Only if a service is used during a day Unlimited Internet 3G e Wifi Millions of online songs to listen anytime, anywhere *500 on-net SMS per day and 30 SMS to other operators Oi S.A. 18

20 Results - Personal Mobility focus on improving quality of customers and at reducing churn and improving arpu Percentage of sales with handset subsidy % 10 Postpaid RGUs and service revenues % q.o.q 0 4Q12 10 RGUs Revenues Early churn 1 Indexed Postpaid Oi Conta Total Q12 Jan/13 Dec/13 1 Until 120 days Oi S.A. 19

21 Results - Personal Mobility New postpaid offer to leverage data growth Voice + Data Package + Unlimited SMS + Unlimited on-net calls Oi Conectado already represents 10% of postpaid sales 12x Traffic sharing Customers can share minutes and SMS with their families Unlimited Oi Wifi until 2014 World Cup Thousands of points of presence throughout Brazil Availability of installments scheme for handsets No subsidy and with the option to pay in up to 12 installments without interest Oi S.A. 20

22 Results - Personal Mobility Prepaid recharges and Data continue to underpin growth Gross recharges vs. prepaid customer base Indexed Gross Recharge Prepaid RGUs Personal mobility service / customer revenue* R$ million Data 1, % 1, Q11 Percentage of ARPU with data revenues Indexed Q12 Prepaid Postpaid 16% 4Q12 +11pp 27% *Includes subscriptions, outgoing calls, mobile long distance, roaming, data and value added Oi S.A. 21

23 Results - Corporate Capturing new service revenues Market growth Data revenue Indexed Mobile revenue Indexed Fixed voice revenue Indexed +2.8% +6.3% -8.5% +6.0% +9.3% -3.3% Oi S.A. 22

24 Results - Corporate Partnering with PT to broaden scope of core services Current cloud offer Virtual data center Virtualized infrastructure resources Web presence Enterprise Web services with guaranteed performance and security Collaboration Simple and secure communication solutions and centralized and efficient collaboration SAP in cloud SAP B1 and SAP HANA platforms, with safety and security of Oi s data centers. Anti spam Centralized filtering solution for corporate Platform updated allowing offers with higher capacity for customer Offer of PaaS and SaaS to strengthen Oi s cloud portfolio Integrated management of Oi and PT s data centers enable solid redundancy and disaster recovery solutions Mobility management Simple and centralized mobility solutions, ensuring security and control Oi S.A. 23

25 Results - SMEs Transformation of operational model already improving churn and enhancing arpu Focus on improving quality of sales Review of commissioning model Adjustment of current offer Fixed and mobile gross and vendors Indexed Fixed Mobile # Salespeople Quality Call¹ Development and alignment of sales channels -66.5% Internal sales force Branded stores Service to Sales 2 1Q13 2Q13 3Q13 Stronger support to partners 1 Confirmation of sales with the customer 2 Transformation of inbound customer interactions in new sales Oi S.A. 24

26 Results - SMEs with better churn and arpu Fixed and mobile churn Indexed Fixed Mobile Fixed and mobile ARPU Indexed Fixed Mobile +15.0% -32.6% 2Q13 3Q13 Oct/13 Nov/13 Dec/13 2Q13 3Q13 Oct/13 Nov/13 Dec/13 Churn decrease driven by quality sales Increasing mobile ARPU due to better customer mix Oi S.A. 25

27 Results - Corporate/SMEs - Net Revenues Focus on improving performance through customer and new services growth Corporate Indexed SMEs Indexed 4Q12 4Q12-3.1% Data +4.4% -8.5% Leading operator in data center services Data should continue to drive future growth Explore new segments of the market to enhance leadership in high growth areas Focusing on improving quality of sales, adjusting portfolio, developing competitive offers and building strong sales channels Corporate / SME R$ million 2, % 2,117 Wholesale Indexed Performance reflecting favorable settlement agreements in 4Q12 4Q12 Oi S.A. 26

28 Results - Oi s Priorities KEY Business PRIORITIES Customers Consolidation of business model and future growth Operations Finance Lower unit costs and smarter spending on capex Asset disposals Focus on Cash flow Culture Teamwork, regional empowerment and Operational excellence with regional plans for intelligence network with and increased infrastructure, network operation, field force and IT optimization accountability Oi S.A. 27

29 Results - Network and Infrastructure optimizing network cost through supplier consolidation Pay as you go model (Users, Capacity) Increase of 3G coverage, using existing 2G sites Migration of voice from 2G to 3G and expansion of offload Wi-fi capacity Modernization of legacy networks including equipment swap Core Backbone Optical Network / IP to 100Gbps GPON solutions for the B2B customer service Renegotiation of O&M contracts Rationalization of suppliers (single supplier 2G/3G/4G per site) Increased sharing synergies (Infrastructure, RAN, Backhaul) Consolidation of Service Platforms and OSS / IMS fixed-mobile convergence Oi S.A. 28

30 Results - Network and Infrastructure...and risk sharing - Ran sharing of 4G-LTE network Standard station Savings % in CAPEX Antena Access Base stations 40% Installation Material Transmission Tower Infra Backhaul Backhaul Tower and adjustments Fiber Transmission equipment 30% 5% 30% Power Radio Cabinet Climate Control Unit Core Platforms 0% RAN Sharing is one more step in rationalizing the common infrastructure Site Sharing RAN Sharing This initiative will be completely transparent to the user perception, not interfering in the relationship between user and operator Oi S.A. 29

31 Results Centralized Operations Rethinking the design of network operations Past Present Future Acknowledgment of network failures Decentralized Field Force Operation Centers in the network service providers Outsourced internal maintenance plant Insourcing of internal maintenance plant Projects to increase service availability Centralization of Field Force Operation Centers Centralized and integrated NOC Structuring projects NOC focused on customer experience Better control of operations logistics Focus on customer experience Availability and capacity Operational efficiency Oi S.A. 30

32 Results - Centralized Operations Improve agility, efficiency and reduce costs Past model Current model 10% reduction of point of care in % reduction of average waiting time when a technical call to the points of care Standardizing processes Operational efficiency Oi S.A. 31

33 Results - Field Force Implementing a field force transformation program Overview Oi Field Force Oi operates one of the biggest field forces in the world Field force concentrated in two service providers (SP s) Significant potential to boost productivity and quality of service Gap between SP s management tools and best practices in the market place. Areas of transformation program there are currently being addressed 1 Management tools Work Force Management (Click) Field Force core functions internalization, cost reduction and 2 retention of technological knowledge Brazilian SP s A small number of SP available Financial constraints Complex labour market Performance standards offering upside potential Focus on service internalization Promote competition between Service Providers to improve 3 performance 4 E2E process reengineering to boost productivity and reduce costs Oi S.A. 32

34 Results - Field Force Delivering on strategic goals 1 Management tools Work Force Management (Click) Field Visits -18.0% Net Promoter Score (NPS) Installation +16pp Technicians breakdown % of multiskill Multiskill Target 2014 x15 Visits per Installation Visits per Installation with booking NPS without booking NPS with booking Before Click After Click 2 Field Force core functions internalization, cost reduction and retention of technological knowledge Main objectives Cost reduction Getting higher quality of service Internal field force management / control (i.e.- core network) Retention of know-how within the company Oi S.A. 33

35 Results - Field Force Improvements underpinned by growth in productivity 3 4 Promote competition between Service Providers to improve performance E2E process reengineering to boost productivity and reduce costs % Brazilian territory with more than one SP s 2014 Initiative ADSL Viability Analysis ADSL Self Installation to Assisted Installation ADSL Speed Change Impact (R$ million) % Brazilian territory with more than one SP s Insource installations of special projects 15 Oi S.A. 34

36 Results - IT IT transformation aligned with company s business model and priorities Short term initiatives Optimise existing applications, processes and infrastructure with a focus on productivity of software factories and operational teams: Conducting productivity benchmarks Working with suppliers to identify areas for joint improvement and synergies Reorganization of internal teams and processes Longer term initiatives Transform the existing IT architecture to be a convergence enabler: Consolidate existing application silos into an application architecture to Converge, Standardise, Integrate and Simplify business processes and development of products and services Improve time to market by adopting more flexible and business user configurable solutions Oi S.A. 35

37 Results - IT Reducing complexity of portfolio, costs and execution risks Number of applications PRELIMINARY NUMBERS Applications already discontinued Non exhaustive To be discontinued 40% Mediation (e.g., SCF3, RMS) To be evaluated 28% 40% applications eliminated Roaming (e.g. ERS, RMS) Cobilling (.e.g. Repasse To be maintained 32% VAS) Network Inventory (e.g. Total Immediate Short / medium Long SCE, SGFI) Work Force Management Plan (e.g. SGE) Oi S.A. 36

38 Results - IT IT and business architecture to provide 360 o view of customer From a silo based architecture... Fixed CRM Provision Billing Network inventory Collections Fiber TV Mobile Region 1 Region 2... to a converged and modular architecture Customer Care & Sales Convergent CRM Provisioning and service activation Provisioning Network inventory Field force Convergent selfcare Corporate applications Business intelligence Comissioning BI Selfcare ERP Billing Rating and billing Convergent collections ERP Current architecture, mainly silo-based by product and region, leads to significant cost overhead, slower time to market and higher execution risk Oi S.A. 37

39 Results Customer Care Digital platforms improve engagement and quality in customer interaction and reduce costs Customer care and self-care Customer experience Digital relationship Technology Processes Attendants / Humanization Improvement of self-care functionality Problems correctly targeted Anatel and rate program Care of billing Quality check-list Speech Analytics Unique platform: customer and product Mobile Care Online sales Repeated calls Indexed. In the next 24h -17pp Satisfaction Indexed +9% Contact Rate Indexed -28% Complaints Indexed -36% Self-care Indexed. Online +572% Online sales Indexed. Revenue +114% Oi S.A. 38

40 Results - Oi s Priorities KEY Business PRIORITIES Customers Consolidation of business model and future growth Culture Operations Operational excellence with regional plans for network and infrastructure, network operation, field force and IT optimization Teamwork, clear leadership and greater empowerment and responsibility for delivery on results Finance Lower unit costs and smarter spending on capex Asset disposals Focus on Cash flow Oi S.A. 39

41 Results - Finance Focus on changing the cash flow profile Quality of sales Redesign of sales process and incentive models Improvement of the quality and productivity of sales channel Reduction of bad debt Clients segmentation Revision of management policies with collecting partnerships Revision of credit analysis Alignment of incentives of the sales force Investments Deploy capital where it makes business sense Model of granular assessment to yield profitable results Investment in improving quality and coverage Reduction of churn Deep dive with regional action plan End to end approach and continuous measurement to deliver results Oi S.A. 40

42 Results - Finance Good progress on ASSET DISPOSALS Pro-forma Numbers Mobile towers Fixed towers Real Estate 1 Fixed towers Globenet 1 Mobile towers TOTAL 2013 Date of Signed Contract Dec/12 Apr/13 Jul/13 Jul/13 Jul/13 Dec/13 - Term of lease (Years) Quantity 1,208 4, ,113-2,007 - Status Completion is expected by March/14 - Transaction value (R$ million) 516 1, ,779 1,525 5,288 EBITDA impact of disposals (R$ million) 200 n.m. 173 n.m. 1,497 1, ,670 Operational cost in EBITDA (R$ million) Operational cost in 2013 EBITDA (R$ million) Cost of 7% to 8% (including opex, capex and tax), estimated cash in of R$3,304 million in 1Q14 and full year opex impact of R$650 million 1- Cash-in still pending 2 - Considering current book value The chart above reflects the current view of management and is subject to various risks and uncertainties, including economic, regulatory and anti-trust factors. Any changes to these assumptions or factors may lead to practical results different from current expectations. Oi S.A. 41

43 Results - Oi s Priorities KEY Business PRIORITIES Customers Consolidation of business model and future growth Operations Operational excellence with regional plans for network and infrastructure, network operation, field force and IT optimization Finance Lower unit costs and xxx spending on capex Asset disposals Focus on Cash flow Culture Teamwork, clear leadership and greater empowerment and responsibility for delivery on results Oi S.A. 42

44 Results - Culture Reorganization substantially completed and team is Motivated to deliver on results Meritocracy Regional P&L Incentives aligned with group wide and individual performance Responsibility Clear leadership Focus on productivity and cost cutting Proximity More autonomy and empowerment for local regions Meet customer needs more quickly Responsiveness Sense of urgency to meet customer needs Faster time to market and response to competition Oi S.A. 43

45 FINANCIAL REVIEW Oi S.A. 44

46 Results - Consolidated Net Revenues Qoq improvement across all customer segments Net revenue R$ million 7,390 2,589 7,099 2,564 Residential Personal Mobility +1.5% 7,209 2,606 Corporate / SMEs Other +1.6% Net revenue R$ million 7, Growth in residential and personal mobility services revenues was more than offset by decline in corporate/smes , % 2,463 2,330 2,389 2, , , % 4Q12 Sales of handsets Personal Mobility Network Usage Network Usage Corporate / SMEs Other 4Q12 3Q13 Oi S.A. 45

47 Results - Consolidated OPEX Tight cost control but room for future improvements Operating cost and expenses R$ million Improving accounts receivable Tighter credit policy for new customers Includes gains in connection with Globenet disposal, reversal of labor contingencies and write-offs 1 4, ,155 Reduction in overtime 3,713 3Q13 Personnel Provision for bad debt Third-Party Services Handset Costs Marketing Other 1 Disposal of Globenet resulted in gains of R$ 1,497 million in. Additionally, in Oi booked a gain associated with the reversal of labor contingencies amounting to R$ 115 million, of which R$ 74 million were deemed to be related to prior years. This gain was offset by one-offs including provisions related to write-offs of fixed assets. Oi S.A. 46

48 Results - Consolidated OPEX and EBITDA ebitda improvement with flat opex against inflation of 5.9% Opex 1 R$ million EBITDA 1 R$ million EBITDA Margin (+) 200: Sale of mobile towers (+) 120: Reversal of labor contingencies +0.3% (+) 173: Sale of real estate (+) 1,497: Net gains 2 1, % 1,999 5,194 5,063 5,440 5,133 5,210 1, % Q12 1Q13 2Q13 3Q13 23 (+) 173: Reversal of 2012 profit sharing (+) 201: Reversal of labor provisions (+) 88: Reversal of 2012 profit sharing (-) 125: Wage benefit 2Q13 3Q13 1 Routine 2 Disposal of Globenet resulted in gains of R$ 1,497 million in. Additionally, in Oi booked a gain associated with the reversal of labor contingencies amounting to R$ 115 million, of which R$ 74 million were deemed to be related to prior years. This gain was offset by one-offs including provisions related to write-offs of fixed assets. Oi S.A. 47

49 Results - Consolidated CAPEX and OCF Alignment of investments with business priorities Capex R$ million 6, % 2,106 6,250 FY 1,515 4Q 75% for network Includes R$250 million of interest capitalized % EBITDA-CAPEX R$ million 410 4Q Q13 231% Routine EBITDA-CAPEX R$ million 14% 426 1, % % 1 - Capitalization of financial expenses related to interest on construction in progress. Note: 2012 figures are proforma as reported by Oi 4Q12 3Q13 Oi S.A. 48

50 Results - Consolidated Net income Net income includes gains on the disposal of globenet Financial result R$ million Reversal of interest and monetary restatement over PIS/COFINS included in Refis Net income R$ million 1,183 Higher average net debt and higher interest rates 7x Q13 Net interest* Other 3Q13 * Net interest includes exchange variation Oi S.A. 49

51 Results - Consolidated Debt Further progress in changing the cash flow profile Change in Net debt R$ million Using financial flexibility to pay down operational outstanding liabilities +R$ 623 million (+R$ 1.3 billion in 4Q12) ,416 29, , ,061 1, ,515 3,496 1, ,095 Net Debt 3Q13 EBITDA Globenet 1 Capex WC Judicial Deposits Taxes Financial Results Dividends Refis Fixed towers Net Debt Proceeds 3G Globenet license 3 2 Net Debt Proforma 1 - Impact of Globenet in EBITDA 2 - Proceeds received in January 17 th 3 Payment done in January 8 th Oi S.A. 50

52 Results - Consolidated Debt No fx exposure and proceeds of R$3,304 million 1 expected in 1q14 following disposals of assets Debt R$ million Interest rate exposure (post-hedge) % Gross Debt 34,347 IPCA 10% TJLP 15% Cash 3,931 49% CDI Net Debt 30,416 Fixed rate 26% 1 - R$1,779 million of Globenet disposal received in January 17 th and R$1,525 million of mobile towers disposal to be received until March/14 Oi S.A. 51

53 Results - Consolidated Debt Liquidity of R$11 billion and over 60% of debt due on 2017&beyond Liquidity R$ million Gross debt amortization schedule R$ million Average debt maturity: 4.3 years Cost of debt: 108% of CDI 2, ,120 3,127 11,523 1,500 7,024 3,931 2,500 4,968 4,116 3,589 Cash BNDES Revolving in R$ Revolving in USD* ECAs in USD* Liquidity Position onwards *Exchange rate of December/13 Oi S.A. 52

54 For further information: Bayard Gontijo Marcelo Ferreira Cristiano Grangeiro Patricia Frajhof Rodrigo Faria Address: R. Humberto de Campos th floor Leblon - Rio de Janeiro RJ Oi S.A. 53