PHAROL, SGPS, S.A.

Legal Proceedings Report • Sep 3, 2016

Announcement | Lisbon | 3 September 2016

Notice to the Market disclosed by Oi

PHAROL, SGPS S.A. hereby informs on the Notice to the Market disclosed by Oi, S.A., according to the company's announcement attached hereto.

PHAROL, SGPS S.A.

Public company Share capital Euro26,895,375 Registered in theCommercial Registry Office ofLisbon and Corporation no. 503 215058 PHAROL is listed on the Euronext (PHR). Information may be accessed onBloomberg under the symbol PHRPL.

Luis Sousa de Macedo Investor Relations Director ir@pharol.pt Tel.: +351 212 697698 Fax: +351 212 697949

Oi S.A. – In Judicial Reorganization Corporate Taxpayers' Registry (CNPJ/MF) No. 76.535.764/0001-43 Board of Trade (NIRE) No. 33.3.0029520-8 Publicly-Held Company

NOTICE TO THE MARKET

News articles published by the press

Oi S.A. – In Judicial Reorganization (the "Company"), considering the news articles published by the press on this date, clarifies that there is still no decision with regards to the terms of the judicial reorganization plan of the Company, including with respect to any "discount" in its debt, and that such terms are still under study and discussion by the management of the Oi Companies. The Company does not confirm the information in the news articles and informs that any information regarding the contents of the judicial reorganization plan at this moment is premature and should be disregarded.

The Company will keep its shareholders and the market informed of any development of the subject matters related to its judicial reorganization.

Rio de Janeiro, September 2, 2016

Oi S.A. – In Judicial Reorganization Flavio Nicolay Guimarães Chief Financial Officer and Investor Relations Officer