RESULTS Rio de Janeiro, August 9, 2017
Important notice This presentation contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 and the applicable Brazilian regulations. Statements that are not historical facts, including statements regarding the beliefs and expectations of Oi S.A. Under Judicial Reorganization (the Company or Oi ), business strategies, future synergies, cost savings, future costs and future liquidity are forward-looking statements. The words will, may, should, could, anticipates, intends, believes, estimates, expects, forecasts", plans, aims and similar expressions, as they relate to the Company or its management, are intended to identify forward-looking statements. There is no guarantee that the expected events, tendencies or expected results will actually occur. Such statements reflect the current views of the Company s management and are subject to a number of risks and uncertainties. These statements are based on many assumptions and factors, including general economic and market conditions, industry conditions, corporate approvals, operational factors and other factors. Any changes in such assumptions or factors could cause actual results to differ materially from current expectations. All forward-looking statements attributable to the Company or its affiliates, or persons acting on their behalf, are expressly qualified in their entirety by the cautionary statements set forth in this notice. Undue reliance should not be placed on such statements. Forward-looking statements speak only as of the date they are made. Except as required under the Brazilian and U.S. federal securities laws and the rules and regulations of the CVM, the SEC or other regulatory authorities in other applicable jurisdictions, the Company and its affiliates do not have any intention or obligation to update, revise or disclose any changes to any of the forward-looking statements herein in order to reflect current or future events or their developments, changes in assumptions or changes in other factors affecting the forward-looking statements herein. You are advised, however, to consult any further disclosures the Company makes on related subjects in reports and communications that the Company files with the CVM and the SEC. 2
Results - Highlights (Brazil) Quarter HIGHLIGHTS o Oi once again reports year-on-year EBITDA and margin increase Routine EBITDA totaled R$ 1,601 million in, 10.8% increase y.o.y. Routine EBITDA margin reached 27.6%, 4.8 p.p. increase y.o.y. o Oi reduces costs by R$ 687 million in the quarter, totaling a R$ 1.2 billion cost reduction in the first half of 2017 The Company is focused on reducing costs ensuring operational efficiency and business sustainability. o Continuous increase in infrastructure investments reinforce our commitment to business sustainability Oi expanded its investments to R$ 1.2 billion in, 1.1% increase y.o.y. Capex to net revenue ratio also increased, reaching 21.2%. o Despite higher investments, Oi s operational cash flow grows significantly in 2017 Operational cash flow (Routine EBITDA Capex) moved up 62.4% in the quarter compared with the same period of 2016, driven by the significant EBITDA increase in the period. o Operational efficiency with continuous improvement in operational and quality indicators reflects in better customer experience Operational initiatives focused on preventive and productivity measures, evolution of the customer care model and digitalization are directly lead to continuous improvement of operational, quality and complaint indicators, as well as operational efficiency gains. As a result of the improvement in efficiency, Oi s opex fell 14.1% y.o.y. and 4.2% q.o.q., despite accumulated inflation of 3.0% in the last twelve months. Improvement of operational and quality indicators translates into a substantially better customer experience, with significant reductions in ANATEL, PROCON and Small Claims Court (JEC Juizado Especial Cível) complaint indicators, down 28.6%, 21.6% and 58.7% y.o.y., respectively. o Net loss of R$ 3.3 billion reflects the impact of the exchange rate on the financial result, as Oi terminated its hedging transactions due to the Judicial Reorganization o Oi s Judicial Reorganization process continues to advance, despite the complexity of the process o Launch of unprecedented product in the market reinforces the Company s digital transformation process Oi Total Play is another pioneering Oi service that combines fixed line and broadband, including an extensive on demand video content. 3
Results - Financial Highlights FocUS ON OPERATIONAL EFFICIENCY AND business sustainability RESULTS IN ANNUAL GROWTH OF INVESTMENTs, ebitda, EBITDA margin AND operational cash flow Financial highlights R$ million Brazil Net Service Revenues 1 Residential Personal Mobility Customer 2 B2B Net Customer Revenues 2 Routine OPEX Routine EBITDA Routine EBITDA margin CAPEX Routine EBITDA Capex 5,733 2,227 1,814 1,713 1,627 5,573 4,191 1,601 27.6% 1,229 372 y.o.y. 1Q17 q.o.q. 6,256 2,368 1,872 1,733 1,914 6,008 4,878 1,444 22.8% 1,215 229-8.4% -6.0% -3.1% -1.2% -15.0% -7.3% -14.1% +10.8% +4.8pp +1.1% +62.4% 6,009 2,354 1,890 1,748 1,703 5,794 4,374 1,692 27.9% 1,227 465-4.6% -5.4% -4.0% -2.0% -4.5% -3.8% -4.2% -5.4% -0.3pp +0.2% -20.1% Consolidated Reported EBITDA 1,617 1,435 +12.7% 1,723-6.1% 1 - Excludes handset revenues; 2 - Excludes revenues from handsets and network usage. 4
Results - Operational Highlights Broadband and pay tv continue To Boost convergence, personal mobility shows signs of recovery and b2b still impacted BY THE macroeconomic scenario Operational highlights Thousand RGUs Total - Brazil 63,216 y.o.y. 1Q17 q.o.q. 69,201-8.6% 63,371-0.2% Residential Fixed line Broadband Pay TV Residential ARPU 16,272 9,657 5,219 1,396 76.5 16,573 10,228 5,149 1,197 77.0-1.8% -5.6% +1.4% +16.6% -0.6% 16,343 9,802 5,204 1,336 79.6-0.4% -1.5% +0.3% +4.5% -3.9% Personal Mobility Prepaid Postpaid 39,802 32,963 6,839 45,319 38,299 7,020-12.2% -13.9% -2.6% 39,837 32,957 6,880-0.1% 0.0% -0.6% B2B Fixed line Broadband Mobile Pay TV 6,501 3,696 542 2,251 13 6,661 3,831 561 2,256 12-2.4% -3.5% -3.5% -0.2% +6.8% 6,550 3,727 547 2,263 14-0.8% -0.8% -1.0% -0.5% -8.1% Public phones 641 648-1.2% 641-0.1% 5
Results - Residential (Brazil) ResidenTial segment reinforces the COMPANY S strategy OF convergence and profitability of the base with solid growth of oi total sales AND high-end offers Fixed line Broad band TV Gross adds 3Q16 +10.4% +16.6% +24.7% 4Q16 1Q17 1 - Includes the discontinued offer OCT (Oi Conta Total) Bundles 1 penetration % of total fixed line customer base Sales of speeds 15 Mbps % of total broadband sales High-end Mix % of total pay TV customer base 25.6 26.5 3Q16 +6.3pp +24.1pp 8.0 9.1 9.4 9.6 9.8 +3.4 p.p. 27.3 4Q16 28.4 1Q17 29.0 Gross Average Speed Oi Total base Customers ( 000) 430 653 3Q16 +35% 898 4Q16 1,168 1Q17 1,411 Churn Fixed line 1P -45.3% Fixed line inside 3P bundle Consistent growth of gross adds confirms the success of convergent offers, especially Oi Total. In the last year, Oi Total base presented an average growth of 35% per quarter. The growth of these offers has had a positive impact on the reduction of fixed line churn and the profitability of the residential base. TOP INTERMEDIÁRIO BÁSICO Oi TOTAL play até 15 MEGA Modem Wi-Fi grátis LIGAÇÕES ILIMITADAS PARA TODO O BRASIL para fixo de qualquer operadora Oi launched Oi Total Play, in line with its digital transformation and reinforcing the convergency strategy. It s an unprecedented product in the market that combines broadband and on demand media. 6
Results - Personal Mobility (Brazil) POSTpaid revenue grows sustained by data. Prepaid revenue shows signs of recovery, driven by the increase of oi livre sales Data revenues R$ million +14.1% % Oi Livre on total base +16.1 p.p. Average recharges R$ +20.8% Net customer revenues 1 Other 2-1.2% % y.o.y. 38.9 54.9 Postpaid + Control +4.1% 854 974 Prepaid revenue Other Offers Oi Livre Prepaid -1.9% 49% 3Q16 4Q16 1Q17 53% 56% 54% 57% Data / Customer revenues Focus on Oi Mais and Oi Livre higher value offerings with more flexibility on usage of franchise. 78% penetration of 3G/4G handsets in total base. -5.5 Jul Var % revenues y.o.y. Aug Sep Oct Nov Dec Jan Feb Mar 2016 2017 Apr May -0.2 Launched in April 2017, the offer Oi Livre Digital allows the customer to choose between the usage of minutes or data. Jun 1Q17 Postpaid + Control revenues maintain solid annual growth (+4,1% vs ), compensating the decrease of prepaid. Reduction in customer net revenues is concentrated in the decline of long distance traffic. Data revenues grew 14.1% vs, accounting for 57% of total customer revenues. Prepaid revenues are still impacted by the macroeconomic scenario, but have been showing signs of recovery in the last few months due to the increase of Oi Livre in the base and the beginning of improvement of the unemployment rate. 1- Excludes revenues from handset and network usage. 2- Includes long distance revenues. 7
Results - B2B (Brazil) B2b has been focusing on innovative and higher value-added solutions, and investing in quality improvement to MITIGATE the macro scenario S IMPACT on revenues Macroeconomic factors have been impacting the segment Companies seeking to reduce costs; Closing of sales points and agencies; Exposure to government customers, who have relevant stakes in Corporate revenues; Credit risks for SMEs, due to the macroeconomic environment;...and has been launching innovative solutions on the Corporate segment... Cloud and Datacenter Pillars of the IT strategy: Security... even in this context, B2B has been presenting a continuous evolution in service quality and customer experience... Average installation time 2 % y.o.y. -3.6% Large Companies 1 Billing complaints % y.o.y. -48.1% Average installation time 3 % y.o.y. -27.0% SMEs Billing complaints % y.o.y. -37.6% Big Data & Analytics IoT... thats allow the increase of Data and IT s share in revenues. Evolution of the share of Data and IT in total revenues % y.o.y. +2.4 p.p. IT 0.6 p.p. Data 1.8 p.p. 3Q16 4Q16 1Q17 3Q16 4Q16 1Q17 3Q16 4Q16 1Q17 3Q16 4Q16 1Q17 1 - Corporate and Wholesale; 2- Advanced voice and data; 3 - Fixed line and broadband. 8
Results - Digital Transformation (Brazil) Digitalization strategy focuses on THE Improvement of customer experience and operational efficiency gains TV e-billing Digital offer- Oi Livre and Oi Mais Técnico Virtual Ativação Digital Minha Oi New Registration Minha Oi pre login Reconnection of service E-billing +171.4% Jan/17 Mar/17 Apr/17 May/17 Jul/17 E-care (Minha Oi) +69.5% Minha Oi pre login barcode Digital Transformation Program Digitalization of services leading to the improvement of processes and eficiency gains; Better customer experience; Operational costs reduction. B2B e-billing Control offer online bill Oi Mais Empresas - Expansion to old portfolio - Customer satisfaction survey Técnico Virtual scheduled repair Oi Total Play E-commerce (gross) +59.9% 9
Results - Business Transformation initiatives THAT SEEK TO IMPROVE CUSTOMER EXPERIENCE AND INCREASE OPERATIONAL EFFICIENCY HAVE been supporting CONTINUOUS IMPROVEMENTS OF QUALITY INDICATORS... Efficiency and productivity of field operations Customer care management model of call centers focused on quality ImprovEMENT IN customer experience and operational efficiency Digitalization Average waiting time to resolution Repairs queue (Fx,+Vx+TV) -33.3% Rework in 30 days Repeated repairs or installation guarantee -20.8% Customer care costs -11.0% 12.0% Customer satisfaction 2 ANATEL complaints Monthly average. -28.6% -21.6% PROCON complaints Monthly average. Initiatives like managing more closely field operations 1 focused on preventive actions and productivity, evolution of the customer care management model and digitalization reflect directly in continuous improvements Average time to service installation Installations queue -31.1% Repeated calls volume -24.0% JEC claims Monthly average. -58.7% of operational, quality and complaints indicators, as well as in operational efficiency gains. 1 Results of the operations of the absorbed network services providers; 2- Customers who called Customer Care are contacted within 24 hours after the call and are questioned about how satisfied they are regarding the service provided by the operator. This research is used for the attendant remuneration and the suppliers bonus. 10
Results - Costs and Operational Expenses (Brazil)... and ALLOWEd SUSTAINABLE REDUCTIONS IN PRACTICALLY ALL COST LINES. Operational efficiency and rigid cost control... Routine operating costs and expenses R$ million Brazilian operations 12 month inflation: +3,0% -687 Million (-14.1%) 4.878 71 0 17 116 116 20 4.191 176 25 196 93... with improvement on EBITDA and EBITDA margin Routine EBITDA R$ million Brazilian operations 1,444 1,534 +10.8% 1,676 1,692 1,601 3Q16 4Q16 1Q17 Handset Personnel costs MTR tariffs cuts Intercon. (ex-mtr cuts) Network Marketing Rent & Prov. maint. Insurance Contingencies Thirdparty services -1.2 Billion (-12.0%) Other 22.8% 24.8% 27.4% 27.9% 27.6% +4.8pp EBITDA Margin 9.731 6 131 227 66 22 372 51 24 292 151 8.565 Operational cash flow (routine EBITDA Capex) R$ million Brazilian operations +62.4% 229 552 318 465 372 1H16 Handset Personnel costs MTR tariffs cuts Intercon. (ex-mtr cuts) Thrirdparty services Network maint. Marketing Rent & Prov. insurance Contingencies Other 1H17 3Q16 4Q16 1Q17 11
Results - Investments (Brazil) Continuous GROWTH of Infrastructure Investments results in Consistent improvement in the quality of services and user experience The Company continues to expand its investments... CAPEX R$ million Brazilian operations 1,215 +1.1% 1,229 2,419 +1.5% 2,455 Data traffic 2G/3G/4G, Tbps Dec/15... commited to the quality of its services and the sustainability of the business +132.7% Data access 2G/3G/4G +2.0%pp 97.4% SMP8 Data connection rate 2G/3G 99.5% Capex / Revenues 19.2% 21.2% 1H16 1H17 18.8% 20.7% IP traffic - ADSL Tbps +80.0% 95.4% Dec/15 98.2% Dec/15 98% Expansion and modernization of the transport network (optical Backbone - OTN 100G; Backbone IP; IP Network - Single Edge) Network sharing (2G / 3G / 4G) Migration of 2G customers to 3G/4G and of 3G customers to 4G Fiber and capacity swap, in order to improve network resilience Dec/15 Dec/15 Average ADSL bandwidth Mbps / User +76.1% Voice access 2G/3G 98.1% Dec/15 +0.3pp 98.4% 0.3% SMP9 Data drop rate 2G/3G Dec/15 5% 0.2% Consolidation of IT architecture 12
Results Cash Position Cash FLOW reflects first half Seasonality, However With significant improvement COMPARING to Previous year's cash generation The Company s operational cash flow this quarter was R$ 723 million higher than the same period of 2016, increasing from R$ - 834 million in to R$ -111 million in. In the first six months of 2017, the Company generated R$ 399 million of cash from operations, an improvement of R$ 1,4 billion compared to the same period of 2016. 1,601-111 -268 3,293 +399-418 7,699 1,229 332 267 116 7,588 157 7,431 7,849 2,455 45 632 238 8,248 817 7,431 Cash balance Mar/17 Routine EBITDA Capex Working Capital Legal Financial sphere¹ operations Anatel Fee² Cash balance Cash balance Dec/16 Routine EBITDA Capex Working Capital Legal Financial sphere¹ Operations Anatel Fee³ Cash balance 3.130-2.419-861 -928 1.444-1.215-568 -531 36 1H16 76-834 -1.002 1- Judicial deposits + taxes. 2- Biannual Concession fee. 3- Anual Fistel fee (R$ 660MM) and biannual Concession fee (R$ 157MM). 13
Judicial Reorganization Process STATUS of the JudiciaL reorganization Request for Judicial Reorganization EGM ratification to request Release of 1st list of creditors Approval by the Board of Directors of the new financial conditions as adjustments to the JR plan Release of 2nd list of creditors by JA Rejection of appeals of Oi Coop and PTIF against the requests for conversion of the suspension of payments proceedings into bankruptcy proceedings by the District Court of Amsterdam Ratification of the plan by the judge Jun 20, 2016 Jul 22, 2016 Sep 20, 2016 Mar 22, 2017 May 17, 2017 Jul 07, 2017 Request approval (Brazil, USA, England) Up to 60 days after publication of the approval decision Sep 05, 2016 Presentation of reorganization plan to the judge Mar 02, 2017 Request approval (Portugal) Interactions with creditors for adjustments in the JR plan Mar 28, 2017 Presentation to the judge of new financial conditions as adjustments to the JR plan Jun 26, 2017 Beginning of the registration for the Creditors Settlement Program of up to R$ 50 thousand 1 Approval of plan in credit holders meeting 1- The beginning of Creditors Settlement Program is awaiting judicial authorization. 14