PHAROL, SGPS, S.A. — Capital/Financing Update 2018

Nov 6, 2018

Announcement | Lisbon | 6 November 2018

Material Fact disclosed by Oi

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

Oi S.A. – In Judicial Reorganization CNPJ/MF No. 76.535.764/0001-43 NIRE 33.300.29520-8 Publicly-Held Company

MATERIAL FACT

Decision rendered in the arbitration proceeding initiated by its shareholder Bratel Capital Increase – New Resources

Oi S.A. – In Judicial Reorganization ("Oi" or the "Company"), in compliance with article 157, paragraph 4 of Law No. 6,404/76 and in accordance with the provisions set forth in CVM Instruction No. 358/02, and in continuation to the information disclosed in the Material Fact on October 26, 2018, hereby informs its shareholders and the market in general that, on this date, it became aware of a decision rendered by the Supporting Arbitrator in the arbitration proceeding initiated against the Company by its shareholder Bratel S.À.R.L. in the Market Arbitration Chamber, which reconsidered its previous decision rendered on October 26, 2018 that suspended the effects of the approval of the capital increase pursuant to the private issuance of new common shares approved by the Board of Directors of the Company in a meeting held on October 26, 2018, in accordance with Clause 6 of the Judicial Reorganization Plan (the "Capital Increase – New Resources"), being the Company authorized to proceed with the acts necessary to give effect to the Capital Increase - New Resources.

The Company will keep its shareholders and the market informed on the development of the subject matter of this Material Fact.

Rio de Janeiro, November 06, 2018.

Oi S.A. – In Judicial Reorganization

Carlos Augusto Machado Pereira de Almeida Brandão Chief Financial Officer and Investor Relations Officer