Oi S.A.

Bayard de Paoli Gontijo - CEO Flavio Guimaraes - CFO and IR Director Pedro Falcao - Engineering Director

Susana Salaru - Itaú Andrew Campbell - Credit Suisse Vera Rossi - Goldman Sachs Jonathan Dann - Royal Bank of Canada Mauricio Fernandes - Bank of America Merrill Lynch Carlos Sequeira - BTG Pactual Andre Baggio - JP Morgan Maria Azevedo - UBS Diego Aragao - Morgan Stanley

Good morning everyone. I have here with me Bernardo Winik, B2C Director; Mauricio Vergani B2B Director; Pedro Falcao, Engineering Director; Jason Inacio, Transformation Officer Director; Jose Claudio Goncalves, Network Operations Director, Carlos Aragão, Regulatory Director and our financial team, with Flavio Guimaraes, CFO and Investors Relations Director, Marco Schroder, Administrative and Financial Director and also Marcelo Ferreira in the IR team.

Thanks for joining this conference call. As you know, Brazil is suffering from worsening macroeconomic environment and great political uncertainty.

But in spite of this, I think that Oi is actually better and more valuable company today than it was a year ago. We remain focused on our strategic priorities, our sustainable operational turnaround, reduce cash burden, and leverage better corporate governance and medium-term return to cash flow generation.

To that end, I will start on page 2. We are not just credit cost at Oi, we are transforming the company.

Oi is building a sustainable operational turnaround transforming our cost base while we improve our infrastructure. Despite higher inflation of 8.9%, our OpEx reduction has accelerated in the quarter to 10.5%.

Despite reductions in Capex, our networks are improving both in absolute and relative terms as key projects come in ahead schedule and below budget. We are confident that this will come true in our numbers as better services will improve customers’ satisfaction and retention.

Despite a worsening macroeconomic environment, our results are in line with our guidance, which we confirm again today, our guidance that when we issued no one in the market believed. The balance sheet is the single biggest challenge faced by the company.

Cash burn remains extremely high in the first half of this year and net debt now stands at BRL34.6 billion. But cash burn will fall considerably in the second half as we continue to grow EBITDA.

The one-off charges of the first half do not recur and working capital improves. With the conclusion of PT Portugal sale, we have begun our liability management process and at improving the company’s debt profile and reducing financial expenses.

We are also working hard to improve our regulatory environment. We are optimistic that teams here are improving, was back on track as well as more conservative discussions about the concessions.

In the medium-term, we expect to return to positive free cash flow generation and asset sales, liability management, operational transformation and a better regulatory environment combined. Lastly, we are just a few days away from taking important step towards improving Oi’s corporate governance to the highest market standards.

The alternative structure proposed to deliver the benefits of Novo Mercado has already been approved by the regulatory agency, ANATEL and by the Boards of Directors of Oi, and will be submitted to shareholders meeting to be held on September 1 in a few weeks. This is the last step to deliver to the market a company with no controlling shareholders and new Board of Directors composed by independent members and new bylaws in line with Novo Mercado standards.

After this approval by shareholders, the 30-day period for the voluntary conversion of preferred shares into common shares will begin. This certainly marks a new era in Oi’s relationship with the market.

Now, I will move to slide 4. There has been a slight softening on revenue trends across the board as the macroeconomic environment in Brazil affects all aspects of our business and has been more than offset by the cost transformation of our business.

In the second quarter of 2015, EBITDA from Brazilian operations grew by an impressive 10.7% year-over-year and 4.1% point improvement in EBITDA margin. Operating cash flow increased by almost 200%.

Year-to-date, routine Brazilian EBITDA has increased almost 12% year-on-year, delivering BRL3.7 billion in the first half of the year. Total net service revenues in Brazil, which excludes handset revenues came to BRL6.5 billion, 3.3% lower than in the same quarter last year, mainly impacted by the MTR cuts and more challenging macroeconomic environment, especially in the business segment.

At the beginning of Q2, we outsourced handset operations. This resulted in a reduction of approximately BRL140 million in reported revenues, but the change will improve margins and working capital.

We are confident that we have the right incentives in place with our partners to ensure that right customers get the right handsets going forward. Just to explain the outsourcing of handsets, in April, we entered in a partnership with a national distributor, which is now responsible for the purchase, distribution and sale of handsets, while we continue to be responsible for the strategic management of the handset chain, the relationship with the sales channels and the definition of the handset portfolio.

This change will bring benefits such as the acceleration of our base migration to 3G and 4G smartphones, increased logistics efficiency and a positive impact on working capital. Despite an increase in inflation in the second quarter to 8.9%, our routine OpEx fell by 10.5% year-on-year in the second quarter, an acceleration versus the last quarter.

This quarter’s OpEx reduction represents a real decline of almost 20% and a nominal decline of 7.7% year-to-date. By focus on efficiency, our Capex fell by 24.5% year-on-year while we increased the capacity of our transport infrastructure increased delivered speeds to the residential customers and improved the quality of wireless network.

Oi is well positioned to take advantage of the market migration from voice to data. As I will show later on, our structural investments have allowed us to improve our key quality indicators, while the network data traffic volume has increased by 20% in 2G and 67% in 3G.

I’d like to reiterate that we are not just creating cost at Oi, but transforming the business to become a sustainable company. Oi’s turnaround is on the right track and we also again reiterate our guidance for 2015.

Slide 5 shows our customer base trends, with a 2.6% year-on-year decline. As we already mentioned, our focus in 2015 is still to improve the profitability of our existing customer base, and as I mentioned above, the quality of their experience.

We have thus focused our initiatives on reducing churn and improving quality of the active base. At the same, we have simplified and repositioned our portfolio.

We revised our credit policy, resized the mix of channels in order to improve the quality of our sales. Additionally, we have maintained a more restrictive base cleanup policy in the prepaid segment in order to avoid paying unnecessary fees on inactive customers.

Moving on to slide 6, we show revenue breakdown. As mentioned, revenues were mainly impacted by the cut of the interconnection tariffs, the outsourcing of handset operations, and the difficult macro-economic environment.

Despite this the stable trend in residential revenues and a solid year-on-year growth of 3.5% in mobile customer revenues are encouraging. Going forward, as our network quality improves, the barriers created by high MTRs fall [ph] and the shift towards data continues, we are optimistic that our customer base will stabilize and grow.

This month, we are launching, higher speed VDSL offers for the residential customers and while customers are flocking [ph] to our simple wireless offers and our relatively active networks. The wireless market of Brazil is transforming.

The rise of data and applications like WhatsApp and Facebook combined with the decline of MTRs is rolling the community effect. Data is the single most important thing for most of our customers.

Oi is well positioned to take advantage of this trend. On slide 7, you can see that the 3.5% year-over-year increase in mobile customer revenues was underpinned by 51% growth in data revenues to BRL709 million.

Data now accounts for 40% of our total customer revenues. This performance was driven by our effort to increase penetration of 3G and 4G handsets in our base, currently at 54%, and to migrate 2G users to our 3G network, which has more capacity to meet the growing demand for data.

All of this has led to another quarter of growth in prepaid recharges. Data is also the key driver in the 7.4% year-on-year ARPU improvement in the postpaid segment, excluding MTR.

Throughout 2015, we have argued that wireless network is better than market lease and the momentum was improving versus peers. Many in the market have speculated that Oi would be the hardest hit of all operators by macroeconomic downturn and that we’re not increasing data consumption.

But this is just wrong. Data is an opportunity.

As seen in slide 8, while others data growth has slowed, ours is still accelerating. Data is now growing into segments of the population with which we have the best relationships.

Similarly, while others have suffered the significant loss in minutes of use per customer, ours are stable. These things combined with the changes that we have made to our credit policy pricing and simple portfolio of offers has meant that our trends have improved relative to peers.

We expect this to continue. Our residential business is also holding up well.

On slide nine, you can see that the profitability of our residential customer base continues to improve in all its product lines with residential ARPU up 6.2% year-over-year. The positive ARPU performance on the three products reflects the company efforts to improve the sale mix to higher value added offerings together with the convergence strategy.

In broadband gross adds, Oi has delivered 58% year-on-year increase in the average broadband speed. Approximately 75% of our gross adds in the quarter have speeds equal or higher than 5 mega and 52% have speeds equal or higher than 10 mega.

Due to that, we presented a 33% year-on-year increase in our broadband base with speeds equal or higher than 10 mega, reaching approximately 27% of the total base this quarter. Similarly, in pay TV the improvement in the sales mix and up-selling led to a 4.7% sequential increase in ARPU.

On slide 10, clearly the corporate segment is being affected by the poor economic environment. As you can see, we are focused on improving sales quality and profitability of our customer base, in the corporate segment, reducing our dependence on voice services by increasing the share of IT and other non-traditional services such as data, data center, cloud and ICT among others.

And in the small and medium enterprises segment, improving efficiency and customer base quality through some initiatives such as portfolio certification, we have reduced by more than 50% our portfolio of offerings for mobile, fixed and broadband services. On slide 11, we discuss changes to OpEx.

Many analysts and investors have expressed skepticism about our ability to continuously deliver cost savings in an inflationary environment. To you, I say again, that we are not undertaking costs cutting efforts.

We are transforming the way we do business. In the second quarter of 2015, inflation rose from 8.1% of Q1 to 8.9%.

In the same period, energy costs have risen by over 30% year-over-year and the depreciating real has driven up some dollar expenses. Despite this and excluding the effects of MTR cuts, leaseback from assets sold and handset costs we delivered an annual reduction in OpEx of 7.5%, an acceleration versus the first quarter.

As you can see, the cost savings are coming from every part of our business. So far this year, we have delivered a 6.1% reduction in OpEx representing a real reduction of around 15% in the first half.

We believe that we still have great opportunities in this multiyear project. Moving now to slide 12, during the first half of this year, we focused on initiatives with short term impact and bring within a larger project.

Increasingly, our cost transformation will come from short term initiatives that ramp across the business. The focus of the second stage is on processes and organizational efficiency, commercial and operational productivity, transversal improvement initiatives and improved customer experience.

I can give you examples like the preparation for a multiproduct launch that improves and broadens the skill of our technicians, thus improving their productivity, saving us money and improving and customer care. But for anyone that wants to understand this project in detail, I invite you to come to Brazil and see what we are doing yourself.

On slide 13, you can see the results of these efforts, an 11% annual increase in EBITDA, a 25% decrease in CapEx and 168% increase EBITDA minus CapEx. In any environment, I think these numbers are impressive, but in this environment I think they are extraordinary and for that I would like thank my team in their continued commitment and hard work.

But the obvious questions with results like this is, is this sustainable? Are we sacrificing network quality and customers’ relationships and help with the long term business for near term cost saving?

and here I want to emphasize and say that we are not. On the next two pages, you will see that despite our savings, both our fixed and wireless networks are improving in absolute and relative terms as we bring major infrastructure projects ahead of schedule and under budget.

We are very proud of this. On slide 14, you can see that apart from sacrificing quality up for cost, we have been improving the key quality metrics of our network by increasing efficiency.

On the last of this page, you can see that 3G and 4G customers have increased by 241% while those in 2G have declined by 21% as we actively migrate customers to our 3G network where there is more capacity. Data traffic in both 2G and 3G has increased, though markedly more so in 3G, 6% to 7%.

And at the same, our data connection rate has improved to 99% while our data drop rate has fallen to just 0.6%. Both of these measures outstrip ANATEL’s targets.

On slide 15, you can see that we are ahead of schedule and below budget in our two most important projects. The new optical backbone rollout which will connect 12 state capital from the northeast to south of the country through a transmission network with more than 30,000 kilometers of fiber and the single IP router network that will simplify architecture and improve signal quality.

As you can see in the middle of the page, these two projects have allowed us to increase the average bandwidth per user by 38% year-on-year while IP traffic has increased by 41%. In addition, on the right had side of the page, customers potentially affected by network congestion have fallen by 22.7% while the percentage of subscribers with more than 10 mega has increased by 33%.

As a result of this strategy, in the second half of this year, we will launch ADSL with speeds up to 35 mega and the corporate GPON for B2B customers. I will now hand over to Flavio who will discuss our balance sheet and liquidity figures with you.

Thank you very much, Bayard and good morning, everyone. As Bayard mentioned at the beginning of the presentation, one of our strategic goals is to address our balance sheet with as much rigor and priority as we are treating the operational turnaround.

As you can see, on slide 17, in order to address this issue, we are focused on three main drivers; monetization of assets, reduction of financial expenses and reduction of regulatory impacts. We are still discussing the Africatel situation, but at the moment we do not have any news to share with the market.

Similarly, we are evaluating the best alternatives for the sale of other assets such as our last change of mobile towers, real estate and call center. On the regulatory front, we have filed the TAC projects which will have a substantial impact on the reduction of cash out flows related to regulatory liabilities in the future.

The regulators should conclude its assessment by November. At the same time, we continue to make progress in the discussions with the regulators and government towards a more constructive agenda in order to encourage the flow of investments in the sector with clear benefits for the society and the country.

As we had already disclosed to the market, with the conclusion of PT sale, we have begun a liability management exercise aiming to improve the debt profile and reduce our financial expenses. We will discuss this exercise in further details on the next slide.

Slide 18 shows the company’s gross debt variation in the quarter as well as the debt profile before and after hedge. With the conclusion of the PT Portugal sale the debt from PTIF which had been classified as liability associated with assets held for sale, what’s reclassified to Oi SA consolidated debt.

It’s important to highlight that immediately after the conclusion of the sale, the company had already begun a series of debt prepayments which exceeded BRL6.2 billion. This prepayment is part of a broader and structured liability management strategy.

For this particular exercise, factors such as the cost of debt, cost of hedge, maturity and currency are being taken into consideration as well as the situation of the international markets and the Brazilian macroeconomic scenario. It’s important to reinforce that the company has a very conservative approach to risk.

Our FX denominated debt is fully hedge. So there is no impact on the income statement as a result of the high volatility of the currency.

Going to slide 19, the completion of PT Portugal sale has considerably increased our financial flexibility for the coming years. In June our cash position after debt prepayments reached BRL16.6 billion.

And our liquidity position came to BRL19.6 billion considering cash in available credit lines which is enough to cover our debt amortization for 2017 ensuring adequate comfort for the company to keep focused on its operational turnaround. Moving on to slide 20, you can see that the cash flow related to the day-to-day operations remained stable, but net debt increased to BRL34.6 billion in the quarter mainly affected by the annual payment of the 3G license, the biannual concession fee payment and the financial expenses that are currently the main drag of our free cash flow.

I want to highlight that we expect cash burn to be lower in the second half as we won’t have the same one-off impacts that usually affect the first half. Now, I will have hand back to Bayard

Thank you, Flavio. Now, going to slide 22, you can see our ongoing progress in the improvement process of Oi’s corporate governance.

As you know, on March 31, we announced the approval by our board of directors of an alternative structure that we believe our company with no controlling shareholders and with the highest standards of corporate governance. Additionally, we have recently announced a new board of directors with independent members that will be submitted for approval by the shareholders at the same meeting that will approve the alternative structure.

ANATEL has just approved the operation and the shareholders’ meeting has been called for September 1. After this approval, the 30-day period for the voluntary conversion of proffered shares into common shares will begin.

We will then be able to deliver what we promised to the market in new way with no controlling shareholders and corporate governance fully aligned to the Novo Mercado standards. Finally, on the slide 23, we summarize that we have been saying by showing that we are making progress on all of our strategic priorities and delivering exactly what we agreed with our shareholders and the market in general from the operating, financial and corporate governance standpoints.

Oi has changed, it may take time for this to be obvious to you but for all of us this is clear. While nothing ahead of us is easy, we believe that Oi is on the right track to return to positive free cash flow growth and create value for our shareholders.

With that said, I’d like now to open for the questions. Thank you very much.

Hi, good morning guys. If you could elaborate a bit more on the liability management, we know that this year there was a new issuance of EUR600 million.

So, I just want to hear a little bit more on what’s the next step in that direction. Thank you.

Thank you Susana, I will pass this one to Flavio here, he can talk about the liability management.

Good morning Susana. As you could see, actually we - we started executed the liability management right after the sale of PT Portugal.

Not only with the new issuance of the EUR600 million, which by the way was a very good transaction where we could not only extend the maturity of the debt profile as such, the market in such kind of volatile condition but also started exchanging the short-term maturities by switching the 2016s and 2017s to the new ‘21, so we do believe that was a very good reduction. But despite that, we also bought back the local debentures which represented a saving of close to BRL300 million for us and also we bought back a portion of the retail bond part of the legacy PTIF bonds.

So a combination of that with the debt that remained at PT Portugal right before the transfer of the asset to Altice represented roughly BRL6.2 billion. Actually at this point, we do have everything mapped, we know what we want to do but again, liability management is well about execution, so it’s much more now a matter of having a very efficient execution rather than making it public.

So what we can expect that the company will keep trying to do in a very smooth pace to capture the more we can from the market conditions and et cetera. And as I mentioned, we’ll take into consideration the short-term maturities in order to minimize the refinancing risks.

We got to take in to consideration the effects, we got to take in to consideration the increase, whether this is again in inflation or in real to get the more we can get out of our portfolio. So now it’s pretty much a matter of execution.

Thank you, very clear.

Yes, good morning. Thanks for taking my question.

I wanted to ask about the - going to need some more detail on the progress as you guys have made on the cost side of the business. As you mentioned it’s been very transformational, very material.

How do you think about how far advanced you guys are in that process, I mean, do you feel like you’re kind of in the middle of the road or is this you know the progress that you’ve made is - this is a large part basically of what is really achievable or where do you kind of stand in this more qualitatively, I realized you probably can’t give specific numbers but if you could give us some sense for how deep you think we are into this process?

Thank you Andrew. That’s a very good question.

I think the point here is that we started doing a what we call here vertical approach in terms of cost cutting at Oi, was basically renegotiating with the contract going after selective price increases, sales channel optimization and now we’re going after what we do believe it will transform in fact the business. So, we’re focusing now on an end-to-end approach.

For instance, we have created a quality forum here which involves almost the whole company, and we’re trying to address issues that we have connecting those different areas to get a better service to all clients at the end. So I think what we can say about this is that the work is just beginning, it’ just - we have done what was in our view the most easier part of the process.

Now, we are changing the focus for a more transformational approach and this is a multi-year project, it’s not going to end in 2015, it will go over 2015 and we truly believe this is going to bring as more efficiency for business and improve productivity of the whole chain of Oi. So again, it’s in our view only the beginning, this is an ongoing process, we’re not going end the transformational office by the end of 2015, it’s the other way around, we’re going to increase its role here at Oi to improve our capabilities to do a better work.

Thank you, Bayard. Does that translate into any kind of broad strokes of where EBITDA margins could go do you think long term, I mean, I know that one of your competitors has referred to their EBITDA margins being more like 35% long term, and I don’t if you work with any kind of broad numbers for where margins could go or it’s too difficult to say?

Well, we know where we want to be, but I mean, the guidance as we give it to market is routine numbers, routine EBITDA and routine EBITDA minus Capex, I mean that’s what we can say, we’re going to continue to do the handwork we’re doing. I’d like to take the opportunity to thank the team here at Oi, I think we’re doing a great job in terms of cost cutting, in terms of Capex control, efficiency, I mean, the environment in Brazil has been very tough this year and we posted solid numbers in terms of cost cutting and we will continue to do that.

That’s great thank you very much.

Good morning. Can you talk about your subscriber and what do you think needs to happen for us to see your subscriber base growing again, as we have seen these connections across the board in the next quarters.

And when we see this growth, do you think the OpEx that you’re expanding is sustainable to see the subscriber base growing again? Thank you.

Thank you, Vera. As I’ve mentioned in my presentation, I mean, this is a new area we decided to focus on the current client base and profitability mainly.

And in that sense, we increased prices by the end of last year, November and December, and we knew this would impact somehow the client base of Oi and it’s happening exactly how we planned, there are no surprises for us of what is going on this year. There was a game plan; we’re executing exactly what we decided to do.

Of course, this is not a sustainable plan for the long run and this is not going to be exactly the strategy for 2016. We have a series of launches to happen in October, we are preparing the Company for a more aggressive approach in terms of marketing 2016.

We have already started somehow to launch new offers for instance, the VDSL offer which is up to 35 megabits per second and fixed broadband is about to be launched, it’s going to be 300,000 new accesses to sell, we are as well going after the capacity we have in Rio de Janeiro for instance and Belo Horizonte in terms of FTTH, we do have capacity there to sell. We’re working on the new offers for the mobile business, we have just launched the new offer for Father’s Day, which is an extremely I would say interesting offer for data.

We do have good capacity to explore that. So again, we’re not afraid of or scared or concerned about the performance in RGU so far, it is exactly how we thought it would be and we’re preparing the Company for a better performance on that for next year.

So it was pretty like focusing on productivity, efficiency, cost control, preparing the Company for periods were we’re going to be focused on marketing again, and then, start to capture some growth from the market. So, it’s going according to our plan, and we do not believe that the OpEx has anything to do with that, it’s the other way round, the OpEx decreased, it’s preparing us as a leaner company, a more prepared company for the future, it’s not impacting at all our capacity, it is basically preparing us for next step.

So, do you think when you resume your growth in the subscriber base or when you return to growth, you will be able to maintain the level of marketing or spending, and other costs or you will have to increase this level?

We had approach marketing at the beginning of this year which was very, very small as you mentioned, it’s not going to be level we’re going to maintain of course, but we’re going to compensate that with other opportunities. So, it’s not an approach of let’s squeeze everything we can from marketing and let’s maintain the OpEx, it’s an approach of let’s maintain the OpEx and let’s do the right things.

We thought it was important to focus on all the stuff in the second half of this year, but it was not a smart decision for us doing that in advertisement in the first half of this year, it will be important for next year and we’re going to compensate that with other efficiencies in cost and expenses lines.

Okay, thank you.

Hi, everybody. I’ve got two questions.

I’ve being reading in the press about the government’s plan, growth and approval plan, and it seems that they’re taking about swapping fiber or some form of fiber commitments in return for what seems like some kind of concession, longer term concession properties. If you could explain what’s happening there.

And if you - if you could put a number on what’s your view of VDSL coverage and where you are at the moment in the medium term plans, I mean, completely, separately, on the ambitions of the free cash flow breakeven. Could you just touch some figures around roughly speaking, what you’re - I mean, are you guys assuming operating free cash flow for 5 billion [ph] to cover interest tax of BRL4 billion to BRL5 billion, is that what you’re doing?

Thank you, Jonathan. Let me - I couldn’t hear everything you were saying.

I mean, there was an echo here in the line but I’ll try to answer, if I didn’t everything, you let me know. First, about the - I think it was about the national broadband plan of the government.

It’s been a while in the market. What we have heard is that the government wants us to have the operators, I mean on the Oi, to take to the market 25 megabits per second speeds in wireline Internet in the whole country.

And I think there are some articles connecting that to the renewal of the concession. Well, let me tell you our view on this.

First, we are more than happy to discuss and we already doing that the anticipation of the renewal of the concession. We think this is important because by 2025, what’s going to be the value of our fixed line voice concession.

So, I think it’s important that we start doing this sooner rather than later. Of course, for Oi, we’re going to do this only, and I will repeat that only if it is not only good for the society but if it’s good as well for the Company, right?

And connecting the two things is something that we believe could happen. We do not believe that it’s feasible to deliver 25 megabits per second all over the places in Brazil.

We don’t think that FTTH in a country the size of Brazil was the - I mean differences in terms of how the population is distributed, it’s reasonable. We only don’t think that.

We have a different view on this. But we are discussing and we can connect to two things to have the outcome that we believe it’s important which is first having a framework, regulatory framework which is aligned its market conditions and we don’t think that the current framework is aligned.

Market has changed. Text voice is not anymore as important as it was in ‘98.

So, slight increases are completely different from the past. So, we are more than happy to do that.

We already doing that somehow with the regulator and we can connect to two things but again only and if only if it is good for the Company. Not in a situation where it’s good only for the society and not for the Company.

So, if it fits both, then we’re fine to discuss and to take different approach. So, that was one question.

The other one I think it was about our capacity to deliver broadband in Brazil.

It was actually in terms of making a sale today, [indiscernible].

Okay. I’m sorry, we were disconnected here for some reason from the bridge [ph].

Well, trying to complete, I don’t know if you got the whole answer the first answer, but the second one, I think was about our coverage and how we are organized in terms of fixed broadband. We have 45 million house passed in Brazil.

Out of this, 13% we can deliver VDSL, meaning high speeds. We are about to launch, as I mentioned, 300,000 new access in VDSL up to 35 megabits per second and we are increasing and improving our ability to deliver high speeds.

I think the work was done and that I presented to you in this call is allowing us to improve and to expand our ability to deliver higher speeds and that’s what we’re going to do and hopefully, in the next quarters, you’ll start to see the results of this. I think the third question was about free cash flow.

I mean, there is no guidance for free cash flow. We’re not saying when we’re going to achieve breakeven.

Again, the guidance is, Brazilian routine EBITDA BRL7 million to BRL7.4 billion and an improvement in routine EBITDA, Brazilian routine EBTIDA minus CapEx from BRL1.2 - in the range of BRL1.2 billion to BRL1.8 billion in 2015. So, we continue to do the hard work.

Yes, the leverage is substantial. Yes, we do have interest expenses to pay and this impacts our cash generation.

But we continue to do the organic work to fix that equation.

Thanks a lot. And again, well done on the operational side.

Thank you. Good morning.

Bayard or Flavio, you mentioned - there was a slide in the presentation about the liquidity and versus debt maturity. It seems to have ample liquidity considering the cash position now and the other facilities you have already seem to have hired already.

The question is, the fact is that markets are under higher risk perception these days across the world in any markets, so I was wondering, what the plans are for the debt that is maturing in 2015 and ‘16? Is there plans to extend those maturities, again, like it was looking in the second quarter and most importantly, if you’ve been able to assess what credit investors are - or banks are thinking about that in terms of really extending the maturities there and whether the costs you would expected to be higher than what you have on those debt instruments today?

Thank you.

Mauricio, I’ll let Flavio answer that.

Hi, Mauricio, thank you. First, the average tenure of our portfolio, it’s 3.7 years and that tends to go a bit up as we are moving forward with the liability management.

So, it’s kind of a comfortable situation because first, as you mentioned, you have roughly BRL20 billion in liquidity and we are right negotiating some facilities. So, I believe that within the next two to three months, we’ll have something new.

But the idea will be first, when there is a good window of opportunity, we can access the market, no matter if it is the local or the international market, but we can access the market and try to extend the maturities, refinance the short-term debt, the way we did back two months with the EUR600 million. By the way, that was the last day of Brazilian combination.

So, we could take advantage of the windows. And we are kind in a liability management driving here.

So, we’ll pay attention to every single opportunity and having this amount of cash in hand give us a lot of comfort. If the market is not there or if it is not there in the conditions that we believe it is good for the Company, we will simply pay it down, pay it back.

So, again, having this possibility to go through 2017 give us a good room for doing the right thing for the Company and waiting for a better opportunity of the market when things are better especially in the local market to try to again keep assessing. If we can do that - if you can refinance the short-term, then that give us the ability to eventually kind of address the mispriced ones.

So, that would be a combination. But things that we are operating in liability management mode, we are paying attention to every single movement of the market and will take advantage of that.

Thank you.

Hi, good morning, Bayard and Flavio, how are you? Sorry, I think now it’s better.

So, good morning, Bayard and Flavio, how are you doing? I have one question really on the assets you believe you can put up for sale.

How much do you believe you can raise in new cash by selling these assets? I know it’s like a - it’s a real one, but wanted to give us an idea of how much you think you have available?

Thanks.

Hi, Carlos. Thank you very much for the question.

I mean, we’ve been talking about the assets. We have not talked about the amount, meaning, it’s something - I mean, this is a negotiation, right.

If I start talking about how much the assets is worth or how much I want for the asset or how much we want to monetize here, I mean, I lose my ability to negotiate. So, not going to get into details.

I mean, out of the assets we have available for sale, Africa is an important one. You know the book value of the asset.

It is in our balance sheet. But then not going to get into specifics about the call center and about the towers.

Important to highlight that we are in a completely different environment from the past. I mean, Brazil is going through a challenging economic environment.

So, of course, just getting back to the ability to develop the assets, but we are working, we do not have any issue in terms of the liquidity as you know. So, we can do that at the right moment.

We can be patient if we need although we are working and we are doing everything we can to get a good result out of those assets to sell. Africa, you know, it is not an easy asset to dispose.

There is only one buyer. We have engaged in conversations over the last three months.

I think that’s a good thing. It was a first time we have conversations about it.

But again, it’s not an easy deal. It’s something that takes time and we are working very hard on all those fronts.

Thank you.

Hi, good morning. So I have two questions.

First question I think that you have done a great job of increasing EBITDA, but I also see in a slide that in fact, debt continues to go up and that’s - we think that’s mainly because of the financial expenses and the working capital. So how can you make Oi going back to, let's say, positive free cash flow?

And the second question is about the consolidated expense, any update on the infrastructure, we spoke a lot about consolidation, but now we think that gives [indiscernible]?

Thank you, Baggio. Well, let's start with the leverage question.

First of all, yes, we have an increase in net debt, about BRL2 billion and yes, it was mainly impacted by financial results and I mean regulatory taxes. But on the other hand, you should take an approach of net debt to EBITDA, we were able to maintain this flat over the last quarter and this is extremely important, because we are doing our operational job and the first thing to fix the finance part of the equation is fixing the operational part of the equation.

So that's our focus at this moment. I mean, we are working very hard to fix things in terms of how we manage the company, how the company approaches the market.

Again, we’re trying to transforming the business and not carrying costs here and we have seen already the early results of this. So although the leverage went up, net debt went up about 2 billion, we were able to maintain pretty much the same pace of net debt to EBITDA over the last quarter.

We will continue to do our operational work here and we will start this, we have started the liability management process to try to reduce the interest expenses. But one thing that could change dramatically this scenario is the regulatory framework.

If we succeed in some of the discussions we are having in that front, then definitely this company is going to be a much better company for the future.

[indiscernible] that could be wiped out at some point in the future?

That's not only judicial deposits, that's judicial deposits and taxes and the good thing about judicial deposits is that the trend this year, it’s improving over the trend of last year. Last year, we had BRL1.2 billion in judicial deposits.

If you take into consideration what has happened in judicial deposits in the first quarter and second quarter of this year, we could do better than last year and that's our goal here. I cannot say that we’re going to get back the judicial deposits.

I can tell you that we’re working hard to do that and we are working hard to at least at the beginning reduce the amount of deposit every year and that's the trend so far this year. So we’ll continue to do that work.

And for the second question, could you make any comment of what’s going on in terms of consolidation, any news there or you feel something could be brought in the future?

I mean, no news. You know how we think about this.

We think it will happen somehow in Brazil. It has happened in other places, but no news, we are analyzing, we are paying attention to the market on that front.

Okay, thanks a lot.

Hi, thanks for taking the question. Could you please tell us what are your later bond and debt covenants at the moment following up the bond purchase that you got issued, where does the covenant is spent?

Okay. I'll hand over this to Flavio.

He can talk about the financial.

In the bonds, we have no financial covenants at all, including the last issuance, we are using the same set of dots we used in the past, so there is no financial covenants implied in those bonds at all.

And for the remainder of the debt?

Well, we do have financial covenants and then, I'll say that will be totally different categories here. One it's B&DS, Banco do Brasil, Caixa Econômica Federal and some credit agencies.

So those ones are the ones that have the financial covenants, but they are, I would say, represents 35% to 40% of the whole - the total indebtedness of the company and the ratio is six times gross debt to EBITDA. We are below that and we’ll maintain below that for the next quarters.

Okay, perfect. And as a follow-up question, could you please explain a little bit better on your CapEx control strategy and the network sharing initiatives going forward?

Should we expect this level of CapEx sales or is it just a short-term shock similar to what happened to OpEx levels as you mentioned? Thank you very much.

I'll start the answer here and then I’ll let Pedro complement. I mean first, again, we do not believe we are sacrificing CapEx in the short term.

I think we are doing what we are supposed to do. Using the amount of cash we have available in a best way, prioritizing what we got to do and what we have showed today here is that we are improving in all I would say initiatives with them.

We are improving the quality of our networks, mobile and the fixed. So definitely the level of CapEx we are deploying at this moment, it's not impacting what we're doing in terms of the network.

But all that, Pedro here will talk about the network and how he sees the CapEx?

So basically in terms of the evolution of the CapEx, we are already benefiting from the synergies we've done in this transformation project and in the renegotiation of all the contracts where we basically lowered 32% price per megabyte of our 3G network and 4G. We are benefiting also from 45% of the RAN sharing with TIM and also 45%, we lowered the cost of our optical network and 25% of our IP network and we are in a position as the indicator show, to start investing with these synergies further in the access, meaning mobile access and also as Bayard was mentioning in this conference, doing more fiber and FTTH for the corporate business and also for the residential.

Perfect. Thank you very much.

Hi. Good morning, guys.

Thanks for taking my question. So related to the spectrum, I mean you have a very good bandwidth on the 1.8.

So and I think you mentioned on your presentation that you guys are practically migrating 2G customers to the 3G platform. So the question is when do you think you can complete this migration and cleaning up the 1.8 and maybe putting this available to deploy 4G using this spectrum.

Did you did not buy the 700 spectrum? Thank you.

Thank you, Diego. I’ll let again Pedro answer that.

Okay. So in terms of the spectrum, basically we didn’t buy the 700, but we have, as you said and as you mentioned, enough 1800 spectrum.

We have like 50 megahertz of 1800 spectrum. We are the operator in Brazil with more spectrum at 1800.

As you know, to fulfil all the regulatory obligations until the end of 2017, we cannot - no operator in Brazil can use this 1800 spectrum to fulfil those obligations. So we are doing this with the RAN sharing with TIM and we believe that for the moment, we are on the right track for the right uses of the spectrum.

Okay. Perfect, Pedro.

And if you don’t mind, one more question regarding the competitive environment. Recently, some of your competitors, I think they changed their portfolio of plans.

So if you could elaborate how you see this recent moves and how do you think Oi is positioned to compete against this new approach, it will be very helpful. Thank you.

Diego, we are as well working on our plans, on our offers. We have just launched the new offer for the Father’s Day and I think it's an aggressive offer in terms of data.

We think that's exactly what our clients want. We’re also trying to work to simplify as much as we can the offers.

We don’t want these letters any more. So what we are doing?

We're working on new offers for more towards third quarter, almost fourth quarter, where we’re going to try, I mean, not surprise the client with bad news, such as, well, this is unlimited, but it is limited if you use this. Well, what do we want it to offer, simple plans and let the clients comfortable to take the decision if they want or not what we are offering.

So we are just in the portfolio, as I mentioned, I think it was to Vera in her question and our, I would say, ambition for 2016 in terms of marketing is going to be different from the ambition we had in 2015 where we are preparing, I would say, the road for this new stage of Oi.

Perfect, thank you, Bayard.

Well, thank you for being in our conference call. Again, I would like to thank the team of Oi for the excellent work done in the first half of this year.

We’ll continue to do our work here quarter-by-quarter and show that this is a new company and that we are doing the right things for the company. Thank you very much and have a good day.