RESULTS Rio de Janeiro, August 13, 2018
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. Forward-looking statements are statements that are not historical facts, including statements regarding the beliefs and expectations of Oi under Judicial Reorganization ( Oi or Company ), business strategies, future synergies, cost savings, future costs and future liquidity. The words 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) Highlights of the Quarter o Oi completes the debt conversion, prepares to consolidate new governance and execute the capital increase, which will finance the business growth. With the conclusion of the conversion of debt into shares, Oi reorganized its corporate structure and now the new shareholders will vote in EGM the company's new permanent board, which will be formed by independent members with a high level of governance, in line with the Corporation s principles. Oi works on the execution of the capital increase planned in RJ and, in parallel, continues to prepare for the execution of the incremental CAPEX Plan, which is focused on investment in fixed and mobile access, to increase the offer of high speed fixed broadband and 4G and 4.5G coverage. o o o o Expansion of infrastructure investments. Broadband is the main driver of penetration of bundled products. Investments in Brazilian operations reached R$ 1,366 million in, 11.1% more than in and up 21.5% over. In preparation for the implementation of the Capex Plan, the Company started a structuring project, with the objective of leveraging the robustness and extensive capillarity of its network, to accelerate the deployment of fiber to the home. This project, based on existing fiber reuse, brings much more agility and lower deployment costs. In the first pilot, in just eight weeks, Oi Fibra captured almost 20% of Market Share in the region where the product was made available. Continuity in improving operational efficiency and strict control of costs. In, in the y.o.y comparison, the Company decreased by R$ 256 million (-6.1%) and, in the year to date, compared to 1H17, cost reduction reached R$ 575 million. Greater operational efficiency coupled with consistent improvements in operational and quality indicators. Preventive actions and increased productivity. Focus on digital transformation, which permeates all segments of the Company and contributes to cost reduction and improvement of customer experience and satisfaction. Consistent year-on-year reduction in ANATEL (-24.1%), Small Claims Court- JEC (-23%) and PROCON (-5.1%) complaint indicators, in relation to. EBITDA and the EBITDA margin remained in line with the Judicial Reorganization Plan. Routine EBITDA totaled R$ 1,555 million in and the routine EBITDA margin reached 28.3%, higher than in and. o Oi presented a net loss of R$1.2 billion in, a reduction of 70.4% over the same period of last year. 3
Results Financial Highlights (Brazil) Cost efficiency with focus on operation and quality improvement sustain ebitda in line with the JR plan Financial highlights R$ million Brazil Net Service Revenues 1 Residential Personal Mobility Customers 2 B2B Net Customer Revenues 2 Routine OPEX Routine EBITDA Routine EBITDA Margin CAPEX Routine EBITDA Capex 5,452 2,114 1,756 1,638 1,524 5,280 3,934 1,555 28.3% 1,366 190 y.o.y. q.o.q. 5,733 2,227 1,814 1,713 1,627 5,573 4,191 1,601 27.6% 1,229 372-4.9% -5.1% -3.2% -4.4% -6.3% -5.3% -6.1% -2.8% 0.7 p.p. 11.1% -49.0% 5,575 2,201 1,768 1,635 1,548 5,374 4,096 1,567 27.9% 1,124 442-2.2% -3.9% -0.7% 0.2% -1.5% -1.8% -3.0% -0.7% 0.5 p.p. 21.5% -57.1% 1 Excludes handset revenues; 2 Excludes handset and network usage revenues; 4
Results Operating Highlights (Brazil) New Offers accelerate the sale of Postpaid. base cleanup impacts the prepaid segment. Convergence supports residential ARPU. B2b remains stable. Operating highlights In thousands with RGUs Total - Brazil 59,071 y.o.y. q.o.q. 63,216-6.6% 59,212-0.2% Residential Fixed line Broadband Pay TV Residential ARPU 15,413 8,821 5,049 1,544 79.4 16,272 9,657 5,219 1,396 76.5-5.3% -8.7% -3.3% 10.6% 3.7% 15,599 9,001 5,085 1,514 80.8-1.2% -2.0% -0.7% 2.0% -1.7% Personal Mobility Prepaid Postpaid 36,477 29,443 7,033 39,802 32,963 6,839-8.4% -10.7% 2.8% 36,434 29,660 6,774 0.1% -0.7% 3.8% B2B Fixed line Broadband Mobile Pay TV 6,541 3,580 542 2,407 13 6,501 3,696 542 2,251 13 0.6% -3.1% 0.0% 6.9% -1.7% 6,539 3,611 545 2,370 12 0.0% -0.9% -0.6% 1.5% 5.3% Payphones 640 641-0.1% 640 0.0% 5
Results Residential (Brazil) Short-term strategies seek to stabilize revenues and the CUSTOMER base. ACCELERATION OF THE STRUCTURAL CAPEX PLAN AIMED AT REVENUE GROWTH. Residential indicators Bundle penetration 1 % of the total fixed line base +14.7 p.p. 3Q17 4Q17 Oi Total base Customers (thousand) 1,411 Churn 1,749 2,111 2,474 3Q17 4Q17-26.1% +19% ARPU +23.0 2,870 Short-term strategy Increase the profitability of existing assets, customers and infrastructure via selective sales initiatives. Repositioning of broadband offers in the competitive ISP scenario. Launch of new regional bundle offers. Review of the retention strategy, changing the discount logic for granting benefits. Selective discontinuation of less profitable offers in the customer base. Residential revenues R$ million 733.7-3.5% Average 707,9707.9 Apr-18-0.7% +0.2% 702.6 May-18 703.9 June-18 Structural strategy Transform the company to massify the performance in fiber Implantation of an innovative project, with the objective of leveraging the robustness and extensive capillarity of the network to accelerate the deployment of fiber to the customer's home, with more agility and lower costs Portfolio review, including naked broadband alternatives and VOIP. Result in the pilot project area Homes passed (thousand) Total HPs estimate 1 st lot delivered Oi Fibra Cabo Frio project 15.4 2,1 Cabo Frio Project Market share - Oi Fibra Lot 1 ² % per week 4.1% W 1 5.2% W 2 6.6% W 3 8.4% 10.5% W 4 W 5 12.9% 17.6% 18.3% W 6 W 7 W 8 Fixed line 1P Fixed line in the bundle Residential Oi Total 1 - Includes the discontinued offer OCT (Oi Conta Total). 2 Considers the market as the Digital Inclusion volume of the census sectors of the lot estimated by Cognatis based on PNAD data 6
Results Personal Mobility (Brazil) Growth in net adds reflects the success of postpaid and control offers. recovery of the prepaid segment follows a slight improvement in the unemployment rate and Oi Livre s penetration in the base Postpaid + Control The acceleration of sales activity focusing on Oi Mais Digital has a positive impact on net adds and postpaid base growth. Net Adds In thousands -19 43-41 -88 3Q17 4Q17 259 Base In thousands +2.8% +3.8% Prepaid revenues grow in line with a slight improvement in the unemployment rate, driven by higher recharge volume per recharger. Net Revenues¹ % quarter on quarter -1.1% 13.0% 2.5% 12.4% 3Q17-0.8% 11.8% 4Q17 Revenues Unemployment 0.9% -3.5% 13.1% Prepaid 12.4% Recharge per Recharger % +3.3% +2.8% The improvement in the portability net add ratio underlines the success of Oi Mais Digital and fuels quarter-on-quarter revenue growth. Increased share of Oi Livre in the prepaid base also boosted revenue growth once that this offer has a higher average recharge. Evolution of Portability Net Adds In thousands -79.3% -69.5% 1 Excludes long-distance revenues. Net Revenues % quarter on quarter -2.6% 4.4% 3Q17-5.0% 4Q17-2.5% 0.9% Oi Livre in the Prepaid Base % Oi Livre Other offers 70,2% 70.2% Average Recharge % Other offers +11.2% Oi Livre 7
Results - B2B (Brazil) B2B turnaround with acceleration of sales activity has translated into higher new revenues from corporate customers B2B revenues have been reacting positively to sales initiatives and improved economic activity B2B net service revenues % year on year -15.0% -12.9% -12.9% -9.1% -6.3% New business prospecting in large companies has been growing since the approval of the JR and translating into new revenues New Business Prospecting after the JR (2018) R$ indexed +529.2% New Revenues (Total) R$ +93.9% +80.7% 3Q17 4Q17 The results reflect changes in the scenario and B2B improvement initiatives in the period: Change in the segment s organizational structure. Approval of the JR Plan and reduced uncertainty about the future of the Company and the business. Synergies between the Retail and the Business segments. Acceleration of sales activity with expansion from 4 to 11 regional units in April, increasing capillarity to gain market share. Improvement in economic activity and greater customer demand for corporate projects, especially IT and data solutions. Jan Feb Mar Apr May June New Revenues (Data) R$ +125% +94% New Revenues (IT) R$ +102% +55% 1 Net sales data refer for the Corporate segment. 8
Results Structural fronts: cost control with efficiency Cost management based on operational efficiency and quality improvement support EBITDA and margin in line with the Judicial Reorganization Plan Oi reduced costs by 6.1% and 6.7% year on year in and 1H18, respectively, with impact on all the expenses lines. Routine EBITDA in line with the JR Plan. Routine operating costs and expenses R$ million Brazilian operations LTM inflation: +4.4% Routine EBITDA R$ million Brazilian operations 4,191-256 million (-6.1%) -2.8% -0.7% -16-13 -115-63 -8-7 -25-10 3,934 1,601 1,567 1,555 6,102 Personnel Interconnection Third-party services Network Marketing maintenance Rent & Contingencies Insurance Other 27.6% 27.9% 28.3% Routine EBITDA Margin JR Report 2018 8.565-575 million (-6,7%) Operational cash flow (Routine EBITDA Capex) R$ million Brazilian operations -58-54 -259-69 -4-39 -43-48 7.990-49.0% -57.1% 372 442 190 1H17 Personnel Interconnection Third-party Network Marketing services maintenance Rent & Contingencies Insurance Other 1H18 9
Results Engineering, Quality and Digital Transformation Quality improvement, efficient field operations and digital transformation continue to be the main PILLARS FOR Continuous cost reduction Efficiency in operations Absorption and closer management of NSPs allowed increased productivity. Rework within 30 days¹ Average time until Repeated repairs or in installation installation¹ warranty (Fx +Vx+TV) Installation queue -13.3% Average waiting time until resolution of the problem¹ Average backlog (Fx +Vx+TV) -17.0% Evolution of the customer service management model incorporated Care the Customer in culture (Fx +Vx+TV) Complaints with ANATEL for technical reasons¹ (Focus) (Fx +Vx+TV) Higher investments in the core and network transmission allowed the Company to offer a more stable network, improving the user experience and, consequently, the need for customer service and support. Customer service cost Indexed -31% -27% Quality improvement New ANATEL complaints Monthly average. Indexed -7% Number of repeated calls Indexed -18% Digital transformation Pioneer in the expansion of digital relationship channels, after implementing the virtual assistant (Chatbot) via Facebook Messenger, the Company innovated once again and expanded the business channel for WhatsApp, reaching 400 thousand contacts in the web channel at the end of this quarter Virtual Technician App reinforces its market presence Problems solved through the Virtual Technician app Effectiveness (%) +9 p.p. Avoided calls In thousands +302% Online bills Indexed +15% Reduction in the number of customer care calls answered² Indexed Online sales Indexed -14% +31.2% -21.6% -35.7% 1 - Results of the operations of the absorbed network services providers (NSRs). 2 Includes Technical support data 10
Results Capex Oi continues preparing itself to implement the incremental capex plan. Fiber reuse will enable greater agility and efficiency in the ftth offer Capex growth in in line with the estimate for the year CAPEX R$ million Brazilian operations 21.2% 11.1% 21.5% 1.229 1.124 1.366 20.0% 24.9% Evolution of the transformation fronts to accelerate the implementation of the plan Preparation Development of the incremental CAPEX plan Structuring of areas, processes and infrastructure to implement the Incremental Capex plan Capex / Net Revenues Acceleration Capital increase Beginning of the implementation of the incremental CAPEX plan Partnership with Huawei to update the fiber infrastructure and upgrading the mobile network to 4.5G and preparing for 5G Pilot project in Cabo Frio JR of FTTH deployment through reuse Incremental CAPEX plan supports transformation and growth through investments in access (FTTx and 4G), ensuring business sustainability Protect Serve Grow Reduction in churn through service quality improvements and bundle strategy Financial priority subject to availability of CAPEX Resource Allocation Matrix Mobile: 3,449 cities Fixed: 9,156 clusters Investment priorities based on : demand competition and existing infrastructure Improved customer service expenses through digitalization and better field operations High profitability in the acquisition of new customers, focus on data and VAS. Criterion for prioritizing regions Com. Advant age NPV/I PV Project ranking 11
Results Capex Strategy for allocating incremental capex with fiber focus and increasing 4G and 4.5G coverage via 1.8 Ghz refarming NPV NPV analysis for 9.2 thousand clusters in Brazil Fixed broadband - Fiber Priority Clusters prioritized based on NPV / IPV Mobile - 1.8 ghz frequency refarming NPV NPV analysis for 3.5 thousand cities with Oi Mobile Priority 1,160 cities prioritized according to the NPV / IPV ratio Priority Result Clusters # NPV R$ Billion NPV/IPV Ratio Capex R$ Billion Priority Result Clusters # NPV R$ Billion NPV/IPV Ratio Capex R$ Billion Priority clusters 4.090 9,1 1,3 6,7 Priority cities 1.160 6,6 1,0 8,8 Total 9.156 9,5 0,6 16,8 Total 3.449 5,5 0,6 14,1 12
Results Capex Massive potential of ftth, with more agility and lower cost, through the Network reuse strategy, which leverages the capillarity of our metropolitan fiber Our existing infrastructure has competitive advantages for the expansion of high-speed mobile and fixed data services, resulting in a more optimized network construction model, with lower initial investments and stronger time to market. Transport network Central Access network Metropolitan Ring This combination results in: Immediate potential of 6MM FTTHenabled homes (missing the electronics in the access and the last fiber to the house only); Market demand will determine the locations and pace of Homes Passed deployment (HPs). Reduced need for a high inventory of homes passed Robust transport backbone prepared to ensure growth of data services 350 thousand km of fiber 2 thousand cities with fiber High capillarity and availability of the existing metropolitan fiber network in the access network Immediate potential : 6MM homes 2018 plans: End the year with 1MM HPs More 1MM of houses suitable to the FTTH (already with electronics in the access) FTTH service in 19 cities 13
Results Structural Fronts: Cash Management, Debt and Shareholding Structure Cash and debt remain in line with the estimate in the JR plan Cash Position R$ million 6,225 Cash Mar/18 +1.555 Routine EBITDA Gross Debt (Fair Value) R$ million 13,534-1,366 - R$ 570 million in Fistel - R$ 243 million in payment of variable compensation +227 +369 Capex +1,686 million -672 Working capital -1,026 million +1.037 +54-136 R$ 156 million in debt novation Legal sphere 15,220-407 Financial operations -1 JR creditors 5,199 Cash June/18 The Fair Value Adjustment should be recorded in the initial debt measurement () and amortized on a straight-line basis over the contractual term and in the currency of each debt. Therefore, from now on debt interest will have two components: 1 + 2 1 Amortization of Fair Value Adjustment NEW SHAREHOLDING STRUCTURE Debt to Equity Conversion Current amount of shares (mm) 676 Conversion shares (mm) 1.747 Shares post conversion (mm) 2.423 Capital Increase Price per Share Equity pre money (R$ mm) 3.000 Shares post conversion (mm) 2.423 Price per share (R$) 1,24 Capital Increase Capital increase (R$ mm) 4.000 Price per share (R$) 1,24 Capital increase shares (mm) 3.230 Gross debt Mar/18 Fair value deferral 1 Interest 2 FX variation 3 Other Gross debt June/18 2 Contractual interest on the face value of the debt. 3 Depreciation of 16% of the real against the dollar in the quarter on the principal of foreign currency debt at fair value, which now represents 53% of the total Total shares after conversion and capital increase ( mm) 14 5.653
Results Net Steps JR plans expects additional revenue growth based on incremental capex funded by the capital increase, in conjunction with recurring margin gains Completion of the new capital structure... Next steps of the judicial reorganization Filing for Judicial Reorganization Approval of the Judicial Reorganization Plan 99% Approval - Approval of the 2017 Financial Statements at an ESM - 20-F filing with SEC EGM to elect a new Board of Directors June/2016 Dec/2017 1h18 2H18 18 months - Ratification of the JR - End of the period for creditors to choose their payment options Conversion of Debt into Shares Capital Increase... will enable the beginning of a sustainable growth cycle. ONGOING Cost control Higher base and infrastructure profitability EBITDA Incremental revenues Digital transformation Incremental CAPEX Incremental Capex strategy Fixed: FTTH and FTTC: Implementation in regions where we compete with large players. Maintain our market share in regions with or without the presence of local competitors Expansion based on improving the customer experience: Higher contracted speed More complete solutions: combos and video streaming VAS FTTH: More stable networks (repair rates) Mobile: Accelerate the expansion of 1.8 Ghz 4G 1800 MHz refarming Network sharing Expansion based on improved data usage experience. 15