PHAROL, SGPS, S.A.

Earnings Release • Mar 26, 2020

Announcement | Lisbon | 26 March 2020

Notice to the Market disclosed by Oi - 4Q19 Results

PHAROL, SGPS S.A. hereby informs on the 2019 fourth quarter results disclosed by Oi, S.A., as detailed in the company's document attached hereto.

RESULTS 4Q19

Investor Relations | March 25, 2020

IMPORTANT NOTICE

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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 ("Oi" or "Company"), business strategies, future synergies, cost savings, future costs and future liquidity are forward-looking statements.

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.

During 4Q 2019, Oi's highlights intensified the execution of its Strategic Plan, going into 2020 with a solid base

Funding

R\$ 4.3 billion for Unitel deal.

R\$ 3.1 billion in PIS/COFINS tax credits.

2Q/20

2Q/20

R\$ 669 million in pension fund surplus distribution.

R\$ 2.5 billion in bridge loan.

R\$ 120 million in real estate sales

Mobile Towers sale.

R\$ 280 million in real estate

(Property in Santa Catarina waiting for Anatel release – R\$ 80 mm).

Data centers sale. 2Q/20

Operations

FTTH

million homes passed by the end of 2019. thousand homes connected in December. 4.6 675

MOBILITY

share of net adds in postpaid in FY 2019. 31%

YoY growth in postpaid customer revenues. 15%

B2B

70% of IT revenue YoY growth.

WHOLESALE 62% unregulated revenues in total revenues mix.

COPPER

billion addressable for focused cost reduction 0.5- 1.0

Efficiency and

• ⁺ Sales, Simplification Mktg & Customer Service
• → Portfolio Simplification; Digital sales channel acceleration. (R\$ 150 – 200 MM)
• • Process and Organization
• → Ongoing Simplification effort and new org implemented (R\$ 100 – 150 MM)

+ Business Support

→ Back-office reduction; Supply Chain / Energy efficiency initiatives. (R\$ 150–300MM)

+ IT, Network and Operations

• → Reduction of IT legacy projects; (R\$ 100 200 MM)
• → Decommissioning of Legacy Networks; (R\$ 150 – 200 MM)

Strategic Options

• General Creditors Meeting (GCM) for Plan amendments and Company flexibility expected for 2H 2020
• Judicial recovery extension granted to allow for GCM
• Market sounding process for mobile in progress
• Strategic options for value maximization in progress
• Full regulatory campaign in place for future PLC impact

FIBER PROJECT implementation reached cruise speed of around 400 thousand Homes Passed and 100 thousand Homes Connected per month…

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1- The pro forma ARPU of R\$ 85,0 excludes the impact of 1st month promotion, and adjusts the pro-rata ARPU of new customers who entered after the beginning of the month

… making Oi's FTTH deployment one of the largest fiber deployments globally, both in speed of homes passed and new customer connections

Internet com ultra velocidade e modem WiFi UP para conectar a casa inteira

The first 72 cities with ftth keep showing consistent broadband revenue growth

Strong FTTH revenue growth, leading to a 7,2% share of total residential net revenues. Decline in legacy revenues reflects structural trends but also Oi Company's revised approach to copper

Copper Broadband Revenue

R\$ million FTTH REVENUE R\$ million ^{566 500 449} 4Q18 3Q19 4Q19 -117 (-20.6%) 15 78 124 +108 (+703.7%) Although with a much smaller customer base, YoY growth in fiber revenues almost offsets decline in copper broadband revenues already.

4Q18 3Q19 4Q19

DTH TV Revenue R\$ million -3.3%

Mobility revenues reverses the trend, growing year-on-year, driven by robust results in postpaid

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1- Excludes interconnection revenues and handset sales. | 2 – Ex-M2M. | 3 – First Payment Default

B2B revenues also back to growth, with good performance on Corporate sales of digital & IT solutions

Digital / IT Solution Provider

Strategy to accelerate the positioning as a solutions integrator structured in 3 key priorities:

EXTENSIVE PORTFOLIO REVIEW ICT roadmap / New solutions

FOCUSED ORGANIZATION

Adherent to strategy, customers' needs and IT ecosystem.

NEW OI SOLUTIONS POSITIONING

Brand review and communication strategy

On Wholesale, strategy focused on unregulated market leveraging infrastructure leadership and offerings for high growth demands areas

1,027

Opex reducer

2019

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1- Excluding mediation impacts.

Fiber to the ISP

Focus on ISPs with better latency, IP infrastructure and network resilience differentials

Fiber to the Tower

The capillarity and availability of Oi's fiber optic network are important pillars to support the exponential growth of data and video traffic in 4.5G and 5G

Fiber to the City

Based on its robust and non-replicable backbone / backhaul transport network, monetizing current infrastructure in a high growth area

Franchise Project

As a part of the company's new wholesale strategy, Oi and MOB Telecom signed a memorandum of understanding (MoU) for joint operation and expansion of FTTH (fiber to the home) projects, in anticipation of a larger Franchise rollout in H2 2020

Cost reduction in legacy businesses must be addressed by facing full on the current Concession shortcomings

Oi's Concession Timeline

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2

3

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Investments to meet regulatory demands: The first stage of the concession's life cycle is marked by negative cash generation, due to investments necessary to meet regulatory obligations and expand copper infrastructure

Return on invested capital: The second stage marked by growth, maturity and decline of concession results, due to increased competition, arrival of new technologies, change in customer's consumption profile, and lack of adequate regulatory evolution (obligations, fines, SLAs, pay phones) , which put the Concession at a marked disadvantage and an unsustainable return going forward

Concession imbalance: Since some point around 2016, concession was no longer sustainable, with deep imbalances between revenues, costs, capex, obligations and cash needs.

DE-AVERAGING: With the Concession term ending in 2025, and while Law 13,879 (PLC 79) is not yet regulated, Company is adopting a "De-averaging strategy", with Proactive regulatory action and Operational efficiency plans to mitigate the negative NPV impact generated by the current unsustainable concession operation.

"De-averaging" approach allows for a very granular analysis of copper's profitability and the design of action plan at the individual Central Office (CO) / Station level, leading to a significant cost reduction possibility

Analysis

18 thousand Central Offices (CO) / Stations analyzed

• Individual returns calculated on a detailed / actual cost basis

(Analyzed for each CO: revenue, customers served, competition context, maintenance cost, etc.).

COs / Stations characterized by 3 profitability groups

Action

Adopt actions according to the individual archetype result of the Central Office

Addressable Costs

Potential cash cost savings of R\$ 500M in the short/medium term and R\$ 1B in the medium/long term

Radical shift in CAPEX allocation during 2019, in line with strategic plan, with a focus on deploying fiber (hp's and HC's), refarming 1.8GHz sites to 4G and 4.5G and reducing legacy investments

Successful execution of short-term funding strategy allows for focused execution of strategic plan during 2020

Ongoing Process

• Non-Core assets :
  • • Unitel Deal closed. US\$ 840 million already received, 4 remaining installments of US\$ 40 million each.
  • • Mobile Towers Signing expected for early 2Q20
  • • Data Centers Expected for end of 2Q20
• Real State: Estimated amount close to R\$ 300 million, over the next few months.
• PIS/COFINS: Total of R\$ 3.1 billion, with fruition of around R\$ 100 million per month, already in progress.
• Sistel: R\$ 669 million in surplus distribution in 36 installments of R\$ 19 million. In place since December 19.

Operational efficiency and digitization initiatives started producing cost savings across virtually all cost lines, helping to bridge part of the gap during the revenue transition period which is still in progress

Operational simplification and cost reduction actions initiated in 2019 will be consistently accelerated in 2020

Estimated

In face of the global COVID-19 pandemics, Company quickly established a Crisis Response team, focusing both on ensuring full business continuity for its operations, as well as a formal process to monitor, analyze and respond to potential impacts with appropriate contingency plans in all fronts

In summary, Oi continues to execute diligently on its strategic plan, and is working on multiple fronts of the company's transformation, with close monitoring of all its key operational, financial and strategic goals

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Shareholder / Debt Holder Value Creation DELIVERED Bridge Loan Unitel Polidoro Property Sale PIS/COFINS Tax Credit Pension Fund Surplus Funding One of the biggest Fiber projects in the world Operations Several initiatives being implemented, impacting all areas of the company. Efficiency and Simplification TO COME Mobile Towers Data Centers Additional Real Estate Portfolio Sales 2 nd with the highest growth in postpaid customers in 2019 B2B and Wholesale revenue growth yoy as a result of strategic plan actions. De-averaging to reduce copper burden. Estimated annualized impact in 2020 between R\$ 650 million and R\$ 1 billion. Simplification Organization and processes Business support Network, Operations and IT

Strategic Options

New General Creditors Meeting (GCM): Court approval to hold GCM in no more than 180 + 60 days (call notice + legal period). Proposed plan amendments to bring company flexibility in order to accelerate the execution of its strategic plan and maximize value creation.

Market Sounding for Mobile Business: First non-binding manifestations of interest received and analysis in progress.

Strategic Options for Value Maximization: Capital structure alternatives to accelerate Fiber project .

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Additional Information

Summary chart of the main financial and operational indicators

Main financial indicators

1 - Excludes handset and interconnection revenues;

Main financial indicators

In thousands of RGUs

Investor relations

invest@oi.net.br

+55 21 3131-2918

www.oi.com.br/ri